What is a 'Common Size Financial Statement'

It displays all items as percentages of a common base figure. This type of financial statement allows for easy analysis between companies or between time periods of a company. The values on the common size statement are expressed as percentages of a statement component, such as revenue

Why commonsize matter?

Common-size income statements facilitate easy comparison. Not only can readers easily see how much of every dollar goes to rent, for example, they can compare that percentage to other companies or other periods in time. This allows analysts to compare companies of different sizes and not be "blinded" by the size differences inherent in the raw data.


sources:
http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/common-size-income-statement-5237
http://www.investopedia.com/terms/c/commonsizefinancialstatement.asp

8 Component of Framework COSO

1.     Internal Environment

Is really important in the organization because it have a phylosophy and style of operational, structure, policy and procedure, also awareness to control the internal of the company

2.     Objective Settings

ERM make sure, that activity done by management is related with the purpose and this purpose set based on the entity mission with the risk appetite and it should be consisten

3.     Event Identification

What happened in internal and external that will be influencing the company’s goal, it should be identify then differenciate it into risk and opportunity

4.     Risk Assessment

Risk should be analyse with calculating the possibility of likehood and the impact side, to determine the management risk

5.     Risk Response

Management choose the risk response, avoid, receive, deduct, and developed the activities, so the risk that will be happen still being tolerate and risk appetite

6.     Control Activities

Policy until procedure was set and implemented to help and make sure risk if risk response is effective

7.     Information and Communication

Identify the relevant information, then communicate it in the time that possible if each people do theirown responsibility 

8.     Monitoring

Monitoring should be continously by the management, then also evaluate it 

Audit Report from Adidas

In our group discussion, We believe the internal control in adidas already work well, why?

Because it proves that the financial statement from adidas is true and fair view of the net asset, financial position, and profit and loss that accordance with the requirement from IDW (Institute of Public Auditors in Germany). Moreover, the report is consistent with the consolidated, financial statement and as a whole provide the suitable view of Group’s position and presents the opportunities and risk in the future.

In the internal control of this company also effective, proven by the evidence in supporting the consolidation financial statement and examine the test basis of audit framework. Also we evaluate the overall presentation of the consolidated financial statement and group management report.

 Auditing Internal Control 

What is internal control?

internal control is kind of system that used for supporting the decision making and the agenda in the organization.here, control have different types, we can see in the organization for example a rules, guidelines, also an action to support the activity in there. this internal control will help the management to achieve the efficient and effective. so the management should consider and compare the relation between cost and benefit.

Here, auditor have a role in detecting and preventing fraud and protecting the organization's resources, both physical and intangible assets. Then all employees produce information used in the internal control system or take other actions needed to affect control. Also, all personnel should be responsible for communicating upward problems in operations, non-compliance with the code of conduct, or other policy violations or illegal actions

Nowadays, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed a model for evaluating internal controls. This model has been adopted as the generally accepted framework for internal control and is widely recognized as the definitive standard against which organizations measure the effectiveness of their systems of internal control. COSO defines internal control as having five components:

1.    Control Environmentà sets the tone for the organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control.

2.    Risk Assessmentà the identification and analysis of relevant risks to the achievement of objectives, forming a basis for how the risks should be managed

3.    Information and Communicationà systems or processes that support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities

4.    Control Activitiesà the policies and procedures that help ensure management directives are carried out.

5.    Monitoringà processes used to assess the quality of internal control performance over time.

 Here, the function of internal control is:

1.     For the effectiveness and efficient of organization’s operation

2.     To recorded the accurate transaction

3.     To show if the financial repoting is reliable

4.     To know if the risk management systems are effective

5.     To complies with laws and regulations, internal policies, also internal procedures