Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 17

According to SAS No. 115, the auditor must evaluate the control deficiencies that he or she has become aware of to determine whether those deficiencies, individually or in combination, are significant deficiencies or material weaknesses. What is the purpose of the auditor’s evaluation in this regard with respect to conducting an audit in accordance with GAAS?

Step 1 of 2

Internal control:

Internal control is the process designed by the management to achieve the following objectivities:

• Effectiveness of the operations and rescue the risk of assets loss,

• Reliability of financing and non-financing external and internal reporting,

• Follow the applicable rules, regulations, and laws, etc.

Audit:

The audit is the process of checking the financial statements of a company `to ensure that it is 100% authentic and free from any kind of bias or fraud.

Fraud:

Fraud means the willingly wrong representation of something, to hide some material facts from outsiders or mislead them about some facts.