A5/M1 Integrated Audit Procedures

Question 1

what approach is used to select control tests to test the effectiveness of internal control in an integrated audit?

Answer 1

top-down approach; starts from auditor evaluating overall risks at financial statement level, then at entity level (ex: entity’s risk assessment process, management override, and any process exists independently from audit of external auditors), then at accounts level , disclosures, and assertions

Question 2

what are the differences between assessing IC in financial statement audit engagement vs. audit of internal control engagement?

Answer 2

• Purposes:
  + FS audit: to help auditor to plan the audit and determine the NET of tests to be performed
  + IC audit: express opinion about whether the entity is maintained, in all material respects, effective internal controls
• Relevant period
  + FS audit: relates to a longer period, such as a year
  + IC audit: relates to a point in time
• Extent of testing:
  + FS audit: more limited. not required to test controls over all relevant assertions
  + IC audit: more extensive. should obtain evidence over all relevant assertions
• Communication of control deficiencies:
  + FS audit: must be made within 60 days of the report release date and has restricted language used
  + IC audit: must be made by the report release date. No restricted language used