Describe a five-step approach that is used for identifying significant or material internal control weaknesses.

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The Answer is 1.Identify existing controls.Weaknesses are the absence of adequate controls,so the auditor must first know which controls exist.
2.Identify the absence of key controls.Internal control questionnaires,narratives,and flowcharts are useful to identify areas in which key controls are lacking and the likelihood of misstatements is increased.
3.Consider the possibility of compensating (or mitigating)controls.A compensating (or mitigating)control is a control elsewhere in the system that offsets a weakness.
4.Decide whether there is a significant deficiency or material weakness.The likelihood of misstatements and their materiality are used to evaluate if there are significant deficiencies or material weaknesses.
5.Determine potential material misstatements that could result.This step is intended to identify specific errors or fraud and other irregularities that are likely to result from the absence of controls.

Describe a Five-Step Approach That Is Used for Identifying Significant