An auditor's primary consideration regarding an entity's internal control is whether the controls:

Question

Quizplus · Accepted Answer

Choice "A" is correct. An auditor's primary consideration regarding an entity's internal control is whether the controls affect the financial statement assertions (to evaluate the risk that a material misstatement may exist in the financial statements). Choice "B" is incorrect. An inherent limitation of an entity's internal control is that its effectiveness can be reduced by management override, but whether this occurs or not is not the auditor's primary consideration. Choice "C" is incorrect. The control environment is a component of internal control, and the auditor needs to understand it, but it is not the auditor's primary consideration. Choice "D" is incorrect. An auditor needs to determine how management's philosophy and operating style affect internal control, but it is not the auditor's primary consideration.

An Auditor's Primary Consideration Regarding an Entity's Internal Control Is