AUD 3 Internal Control 10 - 3 Flashcards
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:
Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.
Step 2 – Document the understanding of Internal Control.
Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR
Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.
Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.
Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:
Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.
Step 2 – Document the understanding of Internal Control.
Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR
Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.
Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.
Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The au_____ should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should per____ the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the r___ assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to i_____fy and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and as____ the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the r___s of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misst________
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement le___
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level a__ at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the rele_____ assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant as_______ level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for cl___es of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of tran_______s,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, acc____ balances,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account bal___es, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and dis______es.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing R___ of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The aud_____ first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first ass____s risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses r___ of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of ma______ misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement le__
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the fin______ statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level