Chapter 8, Problem 8.2RQ

To determine

Concept Introduction:

Internal control is a procedure designed by a company, to ensure whether the company’s financial or operational process is done according to the company’s regulations/policies and helps to make operations more efficient and effective. For verifying the records/accuracy of the company or identify which documentation is related to whom, auditors prepare a list of questions before the audit and asked from the company’s employees and this is a process of internal control questionnaire.

To define:The difference between type1 error and type2 error, terms used to describe these errors, and costs incurred by auditor when the auditor is conducting tests of control and substantive tests