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Marlene is a new audit staff associate who has been assigned to the audit of Bentley Enterprises, Inc. The CPA firm that Marlene works for

Marlene is a new audit staff associate who has been assigned to the audit of Bentley Enterprises, Inc. The CPA firm that Marlene works for has audited Bentley Enterprises for the last five years, and is familiar with the client's industry and significant areas of risk. Marlene's supervisor Ben, an audit manager assigned to Bentley Enterprises, is attempting to explain the concept of a client's system of internal control to Marlene, and why testing of controls are important. Ben can explain this best to Marlene by saying

that if the audit client represents an ongoing client, with a historical record of a strong system of internal control, the auditor is likely to focus more audit time and attention on testing internal controls, and less time to substantive testing, such as tests of details.
a. that a client's system of internal control can be best thought of as the policies, procedures etc. that the client enacts to try to ensure the business runs as it should, and to help the company achieve its mission. Even with a robust system of internal controls in place, the auditor will still test controls as part of the audit to ensure they are operating effectively.
that testing of a client's system of internal control is important to ensure that appropriate controls are operating as they have been designed to do. If the auditor determines that the client's system of internal control is not operating as designed, the auditor is likely to decrease inherent risk related to the audit and increase overall detection risk.
that the auditor always spends a certain pre-determined amount of time on the audit of internal controls. The amount of time spent is agreed upon jointly by the auditors, client management, and the internal audit function.

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