In an audit of financial statements of a private company in accordance with generally accepted auditing standards,an auditor is required to
A) Identify specific internal control activities relevant to management's financial statement assertions.
B) Perform tests of controls to evaluate the effectiveness of the entity's accounting system.
C) Determine whether procedures are suitably designed to prevent or detect material misstatements.
D) Document the auditor's understanding of the entity's internal control.

Question

Quizplus · Accepted Answer

In accordance with generally accepted auditing standards, an auditor is required to document the auditor's understanding of the entity's internal control. The other choices are also important steps in the audit process but are not explicitly required by the standards. Choice A is part of the risk assessment process, Choice B is part of testing the effectiveness of internal control, and Choice C is also part of testing the effectiveness of internal control.

In an Audit of Financial Statements of a Private Company