Most audits of a company are done annually by the same audit firm. Except for initial engagements, the auditor begins the audit with a great deal of information about the client's internal controls developed in prior years. Because systems and controls usually don't change frequently:
A) it eases the burden on the auditor's requirement to do a complete study of the controls this year.
B) it is sufficient for the auditor just to inquire of the client whether the controls have been changed since last year.
C) the auditor can skip the evaluation of this area on repeat engagements.
D) this information can be updated and carried forward to the current year's audit.

Question

Quizplus · Accepted Answer

The information about the client's internal controls developed in prior years can be updated and carried forward to the current year's audit. This allows the auditor to have a basis for their understanding of the controls without having to do a complete study every year, but still ensuring that the controls are still effective and operating as intended. It is not sufficient for the auditor just to inquire of the client whether the controls have been changed since last year, as they still need to assess the controls themselves. Skipping the evaluation of this area on repeat engagements is not recommended either, as changes can occur unexpectedly and may not be communicated to the auditor.

Most Audits of a Company Are Done Annually by the Same