An auditor is required to obtain sufficient understanding of each compo- nent of an entity's internal control system to plan the audit of the entity's fi- nancial statements and to assess control risk for the assertions embodied in the account balance, transaction class, and disclosure components of the financial statements. Required:

a. Define internal control.

b. For what purpose should an auditor's understanding of the internal con- trol components be used in planning an audit?

c. Why may an auditor set control risk at the maximum level for one or more assertions embodied in an account balance?

d. What are an auditor's documentation requirements concerning an en- tity's internal control system and the assessed level of control risk? P-985