Suppose you are auditor on the ICFR audit of Big Papi, Inc, a publicly traded company. Your senior has assigned you a significant list of steps to perform testing the operating effectiveness of ICFR. She tells you that before you can perform the list of audit procedures, you obtain an understanding of the entity’s processes and controls. Based on the prior year’s audit she gives you a list of accounts that she believes you will find to be important, and the classes of transactions that fed into each of those important accounts – at least last year. As she walks off to go to another engagement, she reminds you that this year’s ICFR audit must be very efficient and you should only test the assertions that you need to. 

Required:
a. How will you go about obtaining an understanding of the company’s processes and controls? What will you do? What will you look at? Who will you talk to? How will each of the procedures help you?

b. After you understand the system, what will you do?

c. How will you decide which accounts and assertions to test for operating effectiveness?

d. What will you put in your work papers up through the completion of analyzing design effectiveness?