The Auditor's Consideration of Internal Control Jim Harrison, CPA, is preparing a seminar on internal control for his entry-level professional staff. His predominant concern is to present the staff with an overview of critical issues confronted during an auditor's consideration of internal control under the second standard of field work.

Required: 

To aid in developing the seminar's materials, Harrison asks you to respond to the following questions:

1. Why and how does an auditor consider internal control?

2. For each major class of transactions, how does an auditor decide whether to continue obtaining an understanding of internal control?

3. How does an auditor document internal control?

4. How does an auditor identify an entity's relevant transaction cycles?

5. What is the purpose of a transaction walk-through?

6. After obtaining an understanding, how would an auditor proceed if control activities were not suitably designed to justify reliance?

7. What is the purpose of tests of controls, and what general questions do tests of controls attempt to answer?

8. In tests of controls, what is the difference between an "exception" and an "error"?

9. How does an auditor evaluate internal control from having obtained an understanding of the system and performed tests of controls?