The auditor considers internal control by 4 steps. What is the order for these steps? 1. Obtain an understanding of internal control.
2) Assess control risk.
3) Perform tests of controls.
4) Decide on planned detection risk and substantive testing.
A) 4, 1, 2, 3
B) 1, 2, 3, 4
C) 1, 3, 2, 4
D) 2, 1, 3, 4

Question

Quizplus · Accepted Answer

The first step in considering internal control is to obtain an understanding of it. Then, the auditor can assess the level of control risk to determine the extent of testing needed. The auditor can then perform tests of controls to evaluate the effectiveness of the internal controls. Finally, the auditor can use the results of these previous steps to decide on planned detection risk and substantive testing. Therefore, the correct order of these steps is 1, 2, 3, 4.

The Auditor Considers Internal Control by 4 Steps