chap 12 evaluating, reporting, and testing internal control for nonpublic and smaller public companies

Question 1

what are the 5 big differences for nonpublic copmanies and smaller public comanies forauditing of internal control

Answer 1

1. reporting requirements 2. extent of required internal controls 3. extent of understanding needed 3. assessing control risk 5. extent of test of controls needed

Question 2

in audits of nonpublic companies and non accelerated filers, there is no requirement for an audit of what?

Answer 2

internal control over fiancial reporting

Question 3

the initial presumption of control riks is ____ in the audit of public company FSs

Answer 3

low

Question 4

the auditor will not perform test of controls when the auditor assesses control risk at maximum for what 2 reasons?

Answer 4

1. inadequate controls 2. audit can be completed more efficiently by not relying on and testing controls

Question 5

what 5 components of internal control are applicable to both large and small companies?

Answer 5

1. competent, trustworthy personnel with clear lines of authority 2. proper procedures for authorization, execution, and recording of transactions 3. adequate documents, records, and reports 4. physical controls over assets and records 5. to a limited degree, independent checks on performance

Question 6

for nonpublic companies and non accelerated filers, auditors focus on internal control only to the extent of what (2)

Answer 6

1. needed to assess the risk of material misstatement 2. to do a quality audit of FSs

Question 7

T/F the extend of understanding needed for internal control vary considerably from client to client

Answer 7

T

Question 8

what 2 aspects of internal control would be unreasonable to expect in a small firm?

Answer 8

1. separation of duties 2. having internal auditors

Question 9

what is the most important difference in a nonpublic company in assessing control risk?

Answer 9

the assessment of control risk at maximum for an or all control related objectives when internal controls for the objective are nonexistent or ineffective