Question

1. The types of procedures/evidence the auditor generally uses to obtain an understanding of internal control include:

2. The auditor usually would assess the effectiveness of:

3. A material weakness is defined as:

a. an internal control deficiency that is important to users of the financial statements

b. a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement will not be prevented or detected and corrected on a timely basis

c. an internal control deficiency that has a high probability of neither preventing nor timely detecting a material misstatement of the financial statements

d. an internal control deficiency caused by a material misstatement of the financial statements

Answer 1

Solution

1. The types of procedures/evidence the auditor generally uses to obtain an understanding of internal control include:

• Analytical review
• Inquiry
• Observation
• Inspection
• Recalculation.

2.   The auditor usually would assess the effectiveness of:

Internal Control system of an enterprise

3. A material weakness is defined as:

an internal control deficiency that has a high probability of neither preventing nor timely detecting a material misstatement of the financial statements.