Auditor's Understanding of Internal Control
Using Internal Control During Audit Planning
Auditors obtain an understanding of internal control to identify risks of material misstatement and determine whether they plan to rely on controls during the audit. Understanding internal control is required for every audit, even if the auditor ultimately performs only substantive procedures.
Tip
Understanding controls is mandatory; testing their operating effectiveness is required only when the auditor plans to rely on them or when required by standards.
Summary
Understanding internal control enables auditors to design efficient and effective audit procedures based on assessed risks.