You are part of the independent CPA staff planning the audit of Tivell Inc., an e-commerce company. Tivell is a non-issuer small-business corporation. You are the newly appointed staff on the engagement to audit the financial statements of the company as of December 31 20x6. The audit engagement team has completed their understanding of Tivells internal control as part of the identification of the risks of material misstatements. Based on your discussions with the audit engagement manager, you learned that Tivells system of internal control has been implemented with the teams walkthrough of several automated controls. That is the audit team has assessed the effectiveness of the design of Tivells internal control.

Required:

1. Describe how the audit engagement team would have documented the information obtained about their understanding of Tivells system of internal control. Provide at least three examples of documentation?
2. Explain in a brief paragraph, the difference between the design effectiveness of the controls and the operating effectiveness of the controls. Specifically, highlight differences, if any, that might exist in the case of automated controls?
3. What would you recommend the audit engagement team do, if they wish to rely on Tivells controls with respect to particular financial statements assertions?
4. Explain what organization would issue the standards under which the audit would be performed?