Which of the following types of evidence would an auditor most likely examine to determine whether internal control is operating as designed?Select one: a. Client records documenting the use of computer programs. b. Gross margin information regarding the client’s industry. c. Confirmations of receivables verifying account balances. d. Anticipated results documented in budgets or forecasts.

Which of the following types of evidence would an auditor most likely examine to determine whether internal control is operating as designed?Select one: a. Client records documenting the use of computer programs. b. Gross margin information regarding the client’s industry. c. Confirmations of receivables verifying account balances. d. Anticipated results documented in budgets or forecasts.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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As an auditor, it is important to gain a comprehensive understanding of every aspect of a client’s internal control. This helps in evaluating control risk and preparing for the audit of the client’s financial statements. Choose one of the following questions to discuss: For what purposes should an auditor use their understanding of internal control components to plan an audit? What factors should an audit team consider when trying to reduce the planned assessed level of control risk below the maximum? What are the documentation requirements for a client’s internal control and assessed level of control risk?
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