When obtaining an understanding of internal control relevant to planning of a financial statement audit,the auditor should obtain adequate knowledge about the ________.
A)Design of controls.
B)Controls related to audit engagement assessment.
C)Operating effectiveness of all controls.
D)Safeguards over realization transactions.

Question

Quizplus · Accepted Answer

When obtaining an understanding of internal control relevant to planning of a financial statement audit, the auditor should obtain adequate knowledge about the design of controls. This means that the auditor should understand how the control activities are structured, what processes they are intended to control, and how they are expected to operate. This understanding will help the auditor to identify areas of potential risk and to design effective audit procedures. The other options listed (B, C, and D) are also important aspects of internal control, but obtaining knowledge about the design of controls is the most relevant to planning the audit.

When Obtaining an Understanding of Internal Control Relevant to Planning