Understanding of Accounting and Internal Control. The auditor should obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach.

Required:
From Illustration 8.1 and your understanding from prior chapters (especially Chapters 6 and 7):

A. Define accounting system and internal control.

B. What are the key elements of internal control evaluated in planning? Briefly discuss each one.

C. What procedures (in addition to previous experience with the client) are used to evaluate internal controls?