The internal control audit refers to the process where the internal auditor assesses the operational efficiency of an organization by ensuring its accountability. The internal control audit if performed in the right way can help in auditing the financial statements. To select: The true statement about auditor’s assessment when internal control over financial reporting is assessed.

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Chapter 3, Problem 40MCQ

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Introduction: The internal control audit refers to the process where the internal auditor assesses the operational efficiency of an organization by ensuring its accountability. The internal control audit if performed in the right way can help in auditing the financial statements.

To select: The true statement about auditor’s assessment when internal control over financial reporting is assessed.

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Which of the following is NOT a requirement in management’s report on the effectiveness of internal controls over financial reporting?a. A statement of management’s responsibility for establishing and maintaining adequate internal control user satisfaction. b. A statement that the organization’s internal auditors have issued an attestation report on management’s assessment of the company’s internal controls. c. A statement identifying the framework management uses to conduct its assessment of internal controls. d. An explicit written conclusion as to the effectiveness of internal control over financial reporting.

Which of the following statements is correct concerning the understanding of internal control needed by auditors? The auditors must understand the information system, not the accounting system, The auditors must understand monitoring and all preliminary accounting controls, The auditors must have a sufficient understanding to access the risks of material misstatement, The auditors must understand the control environment, risk assessment, and all control activities

Which statement is false? a. If control risk is assessed as low, the auditor cannot plan on relying on the controls to increase substantive procedures for account balances. b. The auditor will not perform tests of controls; instead, the auditor must plan for substantive procedures, without relying on the client's internal controls. c. Based on obtaining an understanding through risk assessment procedures, the auditor assesses control risk ranging from high (weak controls) to low (strong controls). d. Assessing control risk as high means the auditor does not have confidence that internal controls will prevent or detect material misstatements; assessing control risk as low has the opposite implication.