Traditional Audit Approach vs. Control Self-Assessment Approach

A.

The keyword INCORRECTLY is used in the question.

You need to find out an option which incorrectly describes the traditional approach.

For your exam you should know the information below about control self-assessment and traditional approach: The traditional approach can be summarized as any approach in which the primary responsibility for analyzing and reporting on internal control and risk is assigned to auditor and to lesser extent, controller department and outside consultants.

Control self-assessment is an assessment of controls made by the staff and management of the unit or units involved.

It is a management technique that assures stakeholders, customers and other parties that the internal controls of the organization are reliable.

Benefits of CSA - Early detection of risk - More efficient and improved internal controls Creation of cohesive teams through employee involvement Developing a sense of ownership of the controls in the employees and process owners, and reducing their resistance to control improvement initiatives Increased employee awareness of organizational objectives, and knowledge of risk and internal controls Highly motivated employees - Improved audit training process - Reduction in control cost - Assurance provided to stakeholders and customers Traditional and CSA attributes - Traditional Historical CSA - Assign duties/supervises staff Empowered/accountable employees Policy/rule driven Continuous improvement/learning curve Limited employee participation Extensive employee participation and training Narrow stakeholders focus Broad stakeholders focus Auditors and other specialist Staff at all level, in all functions, are the primary control analysts The following answers are incorrect: The other options specified are correctly describes about traditional approach.

The correct answer is D. Traditional approach requires limited employee participation.

Explanation:

Traditional audit approach: The traditional audit approach is a methodology in which an external or internal auditor tests an organization's controls and procedures to ensure compliance with specific standards, regulations, or laws. This approach is often policy-driven, and the primary control analyst is the auditor. The traditional approach assigns duties, supervises staff, and is implemented through hierarchical control structures.

Control Self-Assessment (CSA) approach: CSA is an approach in which an organization evaluates its own controls and procedures. This approach is often used to determine the effectiveness of an organization's internal controls, risk management, and governance processes. In the CSA approach, staff at all levels, in all functions, are the primary control analysts. They are responsible for identifying risks and developing and implementing controls to manage those risks.

Incorrect statement: Traditional approach requires limited employee participation.

The traditional audit approach does not require limited employee participation, but it does not make employees the primary control analysts. The traditional approach assigns duties, supervises staff, and is implemented through hierarchical control structures. The staff's participation in the traditional audit approach is limited to their roles as controlled objects, not control analysts.

In contrast, the CSA approach involves extensive employee participation at all levels and functions. Staff members are encouraged to identify risks and develop controls to manage them. CSA relies on the expertise of employees and aims to promote a culture of continuous improvement in which all staff members play an active role in the control process.

To summarize, the traditional audit approach and the CSA approach are two different methodologies for evaluating an organization's controls and procedures. The primary control analyst in the traditional audit approach is the auditor, while the CSA approach makes staff members at all levels and functions the primary control analysts. The traditional approach assigns duties and supervises staff, while the CSA approach encourages extensive employee participation.