How can an auditor use inquiry to gain a better understanding of internal controls?
A)By interviewing key employees to gain further insight into the internal control environment.
B)By observing the safeguarding of assets by checking locked doors and safes.
C)By tracing a transaction from the boundary of the organization through to the final reporting.
D)By documenting thoroughly the internal control through the use of narratives.

Question

Quizplus · Accepted Answer

Inquiry involves asking questions and gathering information from key employees, which can provide the auditor with a better understanding of the internal control environment. It allows the auditor to gain insight into the design and operation of internal controls and identify potential weaknesses or areas for improvement. Options B, C and D do not specifically involve inquiry as a method of gaining understanding of internal controls.

How Can an Auditor Use Inquiry to Gain a Better