Pre Workshop Questions

10.13 Why do auditors want to rely on internal controls wherever possible?

10.21 An auditor is required to obtain a sufficient understanding of each of the components of an entity's system of internal control to plan the audit of the entity's financial 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) Explain the reasons an auditor may assess control risk at the maximum level for one or more assertions embodied in an account balance.

(b) What must an auditor do to support assessing control risk at less than high when the auditor has determined that controls have been placed in operation?

10.14 Identify four different types of procedures that an auditor might use when carrying out tests of control.

During Workshop Questions

10.17 What factors should be considered when the auditor attempts to coordinate their work with the entity's internal auditors?

10.22 Jayne Rydell is the auditor of Big Spanners Ltd. At the planning stage of the audit, the internal controls were documented and the preliminary assessment of internal controls suggested that they were effective. The audit strategy was established and required performing tests of controls followed by reduced substantive testing. When the tests of controls were completed, it became clear that some of the internal controls did not operate during the period in the way that they were recorded, and areas of significant control weakness existed. As a result, the audit strategy needs to be amended to extend substantive testing in those areas where no evidence has been obtained from the tests of controls.

Required What are Jayne's obligations for reporting detected weaknesses in the internal control system of Big Spanners Ltd? 10.18 What is meant by auditing around the computer and why does this increase audit risk?