Understanding the Controls

NotesQuizCBE

By understanding the controls in place, the auditor will be able to determine what audit procedures will be required

Understanding it means you can trust that the system gives reliable information

This can be seen in 2 ways

  1. It records substance not form

    Internal controls ensure that when a business undertakes a transaction such as a sale, the final recording of the transaction on the accounts system reflects the true substance of the transaction

  2. Helping prevent fraud & errors

    All this means is that internal controls help prevent fraud and errors which would make the accounting information incorrect.

In this way internal controls will have a direct effect on Audit Risk

NotesQuizCBE