The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor with:
A)knowledge necessary for audit planning.
B)evidential matter to use in assessing inherent risk.
C)a basis for modifying tests of controls.
D)an evaluation of the consistency of application of management's policies.

Question

Quizplus · Accepted Answer

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor with knowledge necessary for audit planning. This includes identifying the risks of material misstatement, assessing the design and implementation of internal controls, and determining the nature, timing, and extent of further audit procedures. The information gathered during these procedures is critical to the development of an effective audit plan, which is the foundation for the entire audit engagement. Evidential matter, a basis for modifying tests of controls, or an evaluation of the consistency of application of management's policies are all possible outcomes of understanding internal control, but they are not the primary objective.

The Primary Objective of Procedures Performed to Obtain an Understanding