In an audit of financial statements,an auditor's primary consideration regarding an internal control policy or activity is whether the policy or activity
A) Reflects management's philosophy and operating style.
B) Affects management's financial statement assertions.
C) Provides adequate safeguards over access to assets.
D) Enhances management's decision making processes.

Question

Quizplus · Accepted Answer

In an audit, the auditor's primary consideration regarding an internal control policy or activity is whether it affects management's financial statement assertions. This is because management's assertions provide a basis for the auditor to plan and perform audit procedures to obtain sufficient appropriate audit evidence. Therefore, an effective internal control policy or activity that supports management's assertions would reduce the level of detection risk and increase the reliability of financial information.

In an Audit of Financial Statements,an Auditor's Primary Consideration Regarding