The purpose of phase 3 in the "process for understanding internal control and assessing control risk" is to:
A)design, perform and evaluate tests of controls.
B)obtain and document an understanding of internal control design an operation.
C)assess control risk.
D)decide planned detection risk and substantive tests.

Question

Quizplus · Accepted Answer

Phase 3 involves designing, performing, and evaluating tests of controls to determine their effectiveness in preventing or detecting material misstatements in the financial statements. Other phases in the process involve obtaining an understanding of internal control design and operation, assessing control risk, and deciding planned detection risk and substantive tests.

The Purpose of Phase 3 in the "Process for Understanding