INTERNAL CONTROL: NON-LINEAR VIEW

Abstract

Purpose – the main purpose professional standards require an auditor to obtain an understanding of a clients business, including its internal control. The author adheres to another, broader approach of the notion of non-linearity internal control. Unable to default to high control risk and perform only analytical and tests of balances procedures, an auditor is required to obtain the understanding, identify and evaluate risks of material misstatement due to fraud and error and link the risks to appropriate substantive procedures to prevent financial statements from being making it easier making it materially easier misstated. Understanding and documenting internal control is integral to this process, which is the formulation of an audit strategy and conclusion of the research paper.
Methodology – The internal control system, in which stimuli causes a backlash, with small impact on internal control system may cause big effects, should be recognized as nonlinear approach.
Originality/value – importance of work nonlinearity of is expressed in the complexity of the system of internal control, the prevalence of unsustainable, not deterministic ones processes, describes the development of internal controls with departures from sustainability facility, nonlinear nature of internal control, with lots of chaotic links.
Findings – main focus and findings of the article already in the not to distant future researchers will pay great attention to the study of nonlinear phenomena in internal control, especially in the audit. Economic activities will certainly lead to the adoption of the new governance system self-organizing nature of internal control, accounting systems based on non-linear thinking.