Refer to the Auditing in Practice feature, “Weak Internal Control Design and Links to Substantive Audit Procedures.” Explain how the auditor’s preliminary assessment of control risk affects planned substantive audit procedures.
Answer to relevant QuestionsAn important part of Phase II of the audit opinion formulation process is determining how to respond to identified risks of material misstatement. As indicated in Exhibit 5.8, the auditor might respond by modifying evidence ...When the auditor determines that controls are not operating effectively, the auditor needs to consider the kind of misstatements that could occur, how they might occur, and how the auditor would adjust substantive audit ...Explain how the factors in the first column affect the auditor’s decision about substantive testing.Refer to the Professional Judgment in Context feature at the outset of the chapter, which features details on the Ernst & Young-UK audits of Thornton Precision Components from 2004-2006. Use the ethical framework presented ...What controls might an auditor test related to the valuation assertion for the sales account?
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