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Provide an example of a situation in which the performance of tests of controls for the internal control audit might affect the performance of substantive procedures in a financial statement audit.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter1: Auditing: Integral To The Economy

Section: Chapter Questions

Problem 4TFQ

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Provide an example of a situation in which the performance of tests of controls for the internal control audit might affect the performance of substantive procedures in a financial statement audit.

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Similar questions

Explain the objective ofconducting an audit of financialstatements and an audit ofinternal controls.
Why is there a need on the part of the client entity to monitor internal controls over time? a. Because the auditor needs to obtain understanding of internal control b. Because unmonitored controls tend to deteriorate over time c. Because it will affect the timing of substantive audit procedures d. Because it is a requirement of the applicable financial reporting framework
The auditor obtains sufficient understanding of the internal control structure to identify reportable conditions. True or false? why?
Analytical procedures used in planning an audit should focus on identifying(1) material weaknesses in internal control.(2) the predictability of financial data from individual transactions.(3) the various assertions that are embodied in the financial statements.(4) areas that may represent specific risks relevant to the audit.
An auditor uses assessed control risk to(1) evaluate the effectiveness of the entity’s internal controls.(2) identify transactions and account balances where inherent risk is at the maximum.(3) indicate whether materiality thresholds for planning and evaluation purposesare sufficiently high.(4) determine the acceptable level of detection risk for financial statement assertions
Justify the purpose of performing a financial statement audit and an internal control audit.
Tests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activitie
Tests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activities.
The primary purpose for obtaining an understanding of a nonpublic audit client’s internal control is toa. Provide a basis for making constructive suggestions in a management letter.b. Determine the nature, timing, and extent of further audit tests to be performed.c. Provide the rationale for the inherent risk assessment at the financial statement assertion level.d. Provide information for a communication of internal control–related matters to management.
The auditor should consider audit risk when planning and performing an audit of financial statements. Audit risk should also be considered together in determining the nature, timing, and extent of auditing procedures and in evaluating the results of those procedures. Required: a. Define audit risk. b. Describe the components of audit risk (e.g., inherent risk, control risk, and detection risk). c. Explain how these components are interrelated. (AICPA, adapted)
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