Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 26

After gaining an understanding of internal control, the auditor may attempt to assess control risk at less than the maximum. For this purpose, the auditor should (1) identify specific controls that are likely to prevent or detect material misstatements in the relevant financial statement assertions, (2) perform procedures directed at the effectiveness of the design of the controls, and (3) perform tests of controls. The purpose of tests of controls is to a. Assure that the auditor has an adequate understanding of internal control.
B) Evaluate the effectiveness of such controls.
C) Provide recommendations to management to improve internal control.
D) Evaluate inherent risk.