When considering internal controls,
A) auditors can ignore controls affecting internal management information.
B) auditors are concerned with the client's internal controls over the safeguarding of assets if they affect the financial statements.
C) management is responsible for understanding and testing internal control over financial reporting.
D) companies must use the COSO framework to establish internal controls.

Question

Quizplus · Accepted Answer

Auditors are primarily concerned with the client's internal controls over the safeguarding of assets if they affect the financial statements. While auditors may consider internal controls related to management information, their main focus is on those that impact financial reporting. Management is responsible for understanding and testing internal control over financial reporting, but there is no requirement for companies to use the COSO framework; it is just a widely accepted model for establishing internal controls.

When Considering Internal Controls