In an audit of financial statements in accordance with generally accepted auditing standards, an auditor is required to:

Question

Quizplus · Accepted Answer

Choice "A" is correct. The auditor is required to document key elements of the understanding of the entity and its environment, including each of the components of internal control. Choice "B" is incorrect. Auditors are not required to search for significant deficiencies in the operation of internal control. They are merely required to report such conditions discovered during the audit to those charged with governance. Choice "C" is incorrect. Auditors are not required to perform tests of controls unless they plan to place reliance on a particular control. Since auditors are not required to rely on the client's controls, tests of controls are generally not required. Choice "D" is incorrect. The auditor generally is not required to determine whether the client's controls operated effectively to prevent or detect material errors. Such determination would only be required for controls on which the auditor plans to rely.

In an Audit of Financial Statements in Accordance with Generally