Understanding of audit client internal control

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Reference no: EM133209396

Question 1.

An auditor is required to obtain a suf?cient understanding of internal control to plan the audit. This requirement encompasses obtaining an understanding of the control environment, the accounting system, and the control policies and procedures.

1. What are some of the reasons for obtaining an understanding of an audit client's internal control?

2. What audit work is required for an auditor to be able to assess control risk below maximum?

3. Should an auditor always try to obtain enough evidence to be able to assess control risk below maximum? Explain.

Question 2.

Assume you are currently planning an audit for a pro?t-orientated small enterprise business (private). List 3-4 examples of potential users of the ?nancial statements. The engagement partner has asked you to calculate the relevant materiality amounts for the audit (Materiality, PM, AMPT). Assume the relevant benchmark is based off on Net Income before Tax, and the amount is $1,000,000.

Question 3.

Distinguish between misstatements due to error and misstatements due to ?end and explain the auditor's responsibilities for the detection of both.

Reference no: EM133209396

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