In a top-down approach to understanding internal control over financial reporting and selecting the specific internal controls to test, the auditor focuses on _______-level controls.
A)entity
B)division
C)operating unit
D)function

Question

Quizplus · Accepted Answer

In a top-down approach, the auditor begins by identifying entity-level controls, which have a pervasive effect on the company's ability to detect and prevent material misstatements in the financial statements. Entity-level controls include tone at the top, management's risk assessment, the control environment, and monitoring activities. The auditor will then test these controls to determine their effectiveness before moving on to other lower-level controls. Therefore, the auditor focuses on entity-level controls in a top-down approach.

In a Top-Down Approach to Understanding Internal Control Over Financial