During the audit of a private company's financial statements,which of the following statements best describes the minimum work an auditor must perform in connection with a company's internal control?
A) Perform exhaustive tests of accounting controls and evaluate the company's control system effectiveness.
B) Determine whether the company's control policies are designed well enough to prevent material misstatements.
C) Prepare auditing working papers that document the auditor's understanding of the company's internal control.
D) Design procedures to search for significant deficiencies in the actual operation of the company's internal control.

Question

Quizplus · Accepted Answer

The minimum work an auditor must perform in connection with a company's internal control is to prepare auditing working papers that document the auditor's understanding of the company's internal control. This includes documenting the company's control environment, control activities, and monitoring activities. It is not required to perform exhaustive tests or design procedures to search for deficiencies at this minimum level, although the auditor may choose to do so if they believe it is necessary. The auditor is also not required to determine whether the company's control policies are well-designed at this minimum level, although they may identify potential weaknesses in the control environment during their documentation process.

During the Audit of a Private Company's Financial Statements,which of the Following