External Auditing Chapter 6-7

1. Distinguish between the substantive strategy and reliance strategy.

2. What does assessing control risk involve? How do auditors respond to instances of high or low control risk?

3. Distinguish between obtaining an understanding of controls and test of controls. Know what is required of the auditor.

4. How do changes in the audit risk model (inherent risk, control risk, detection risk) effect the auditors strategy (nature, timing, extent of auditing procedures)?

5. What are the auditors responsibilities as it relates to control deficiencies, significant deficiencies, and material weaknesses? What is the difference between these three types of issues with controls?

6. How do the auditors responsibilities differ between audits of public companies and non-public companies?

7. What is the definition of an integrated audit?

8. What are basic requirements of the Sarbanes-Oxley act?

9. Who is responsible for the entitys internal controls?

10. What types of documentation should management have in regards to their internal controls?

11. What are the auditors requirements to rely on the work of others during the audit of internal controls?

12. Define and understand what a scope limitation means in relation to an audit.

13. What are the key components of an auditors report for the audit of internal controls? How do control deficiencies, significant deficiencies and material weaknesses affect the auditors report on controls?