Narratives, flowcharts, and internal control questionnaires are three commonly used methods of
A) documenting the auditor's understanding of internal controls.
B) testing internal controls.
C) designing the audit manual and procedures.
D) documenting the auditor's understanding of client's organizational structure.

Question

Quizplus · Accepted Answer

Narratives, flowcharts, and internal control questionnaires are all used in documenting the auditor's understanding of internal controls. These methods provide a framework for the auditor to assess the design and effectiveness of the internal controls, which is required for planning the audit and determining the nature, timing, and extent of audit procedures. Option B is incorrect because testing internal controls is a separate step performed after documenting the auditor's understanding of internal controls. Option C is incorrect because designing the audit manual and procedures depends on the complexity of the client's operations and the initial assessment of the internal controls. Option D is incorrect because the client's organizational structure is usually analyzed separately from the internal control evaluation process.

Narratives, Flowcharts, and Internal Control Questionnaires Are Three Commonly Used