Question
[The following information applies to the questions displayed below.] An Audit of Internal Control Over Financial Reporting While the audit of internal control over financial
[The following information applies to the questions displayed below.]
An Audit of Internal Control Over Financial Reporting
While the audit of internal control over financial reporting (ICFR) and the audit of financial statements have different objectives, the auditor must plan and perform the audit work to achieve the objectives of both audits as an integrated audit. Using a top-down, risk-based approach, the auditor should design tests of controls to accomplish the objectives of both audits simultaneously.
The auditors objective in an ICFR audit is to express an opinion on the companys internal control over its financial reporting. To meet this objective, an auditor must plan and perform the audit and obtain reasonable assurance. As a sequential process, an audit of internal control over financial reporting includes the following five steps (see Figure 7-2): (1) Plan the Audit of ICFR (Plan); (2) Identify controls to test (Identify); (3) Evaluate the design and test the operating effectiveness of selected controls (Scope); (4) Evaluate identified control deficiencies (Evaluate); and (5) Form an opinion on the effectiveness of the ICFR (Report).
Part 2 - Concept Check
1. Efficient planning of the evaluation of internal control requires _______ the financial statement audit
options: coordination with, duplicating, ignoring, outsourcing, replacing
2. Evidence as to the design of internal control and its operating effectiveness should be considered __________ the date specified in the assessment.
options: after, as of, before, close to, near
3. Management's evaluation process of internal control _______ with the management report on internal control-the first step of the audit process.
options: begins, concludes, occurs, stalls, starts
4. Auditors should use a ______ approach to assess controls.
options: bottom-up, medium, middle, negative, top-down
5. The ___________ committee is especially important as it exercises oversight responsibility over the financial statements.
options: audit, benefit, human resource, investment, social
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started