Procedures to obtain an understanding of internal control may suffice for tests of controls when the auditor is assessing control risk in a well defined transaction cycle that has not contained material misstatements in prior audits.

Question

Quizplus · Accepted Answer

Understanding internal control is not sufficient for tests of controls; tests of controls are necessary to evaluate the effectiveness of controls, even if there were no material misstatements in prior audits.

Procedures to Obtain an Understanding of Internal Control May Suffice