When considering internal control, an auditor must be aware of the concept ofreasonable assurance, which recognizes that the(1) employment of competent personnel provides assurance that management’scontrol objectives will be achieved.(2) establishment and maintenance of internal control is an important responsibilityof management and not of the auditor.(3) cost of internal control should not exceed the benefits expected to be derivedtherefrom.(4) separation of incompatible functions is necessary to ascertain that the internalcontrol is effective
When considering internal control, an auditor must be aware of the concept ofreasonable assurance, which recognizes that the(1) employment of competent personnel provides assurance that management’scontrol objectives will be achieved.(2) establishment and maintenance of internal control is an important responsibilityof management and not of the auditor.(3) cost of internal control should not exceed the benefits expected to be derivedtherefrom.(4) separation of incompatible functions is necessary to ascertain that the internalcontrol is effective
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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When considering internal control, an auditor must be aware of the concept of
reasonable assurance, which recognizes that the
(1) employment of competent personnel provides assurance that management’s
control objectives will be achieved.
(2) establishment and maintenance of internal control is an important responsibility
of management and not of the auditor.
(3) cost of internal control should not exceed the benefits expected to be derived
therefrom.
(4) separation of incompatible functions is necessary to ascertain that the internal
control is effective
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