AU-C 315 and AU-C 330 provide auditors with information in which a client’s internal control affects financial statement audits. The guidance first is about obtaining an understanding of the entity including its internal control to help auditors to assess the risk of material misstatement and to design the nature, timing and extent of further audit procedures—this material is in Sections C through E of the outline of AU-C 315.
A. The Nature of Internal Control
B. The Auditor’s Consideration of Internal Control
C. Audits (Examinations) of Internal Control
D. Accounting Cycles
E. Other Considerations
Multiple-Choice Answers and Explanations
Next, AU-C 330 provides auditors with guidance on the nature of further audit procedures as they relate to internal control (i.e., tests of controls).
The following “Diagram of an Audit,” originally presented in the auditing overview section, shows the relationship of internal control to an audit:
This module covers obtaining an understanding of internal control and tests of controls. It also develops the relationships among internal control and further audit tests—tests of controls, and substantive tests. Every CPA examination includes numerous questions on internal control and its relationship to ...