This involves all five components of internal controls, which are the client's control environment, risk assessment, information system, control activities, and monitoring of controls.

The common steps in any transaction stream are authorization, executing the transaction, recording the transaction, and consideration.

This describes where material misstatements due to error or fraud could occur in a flow of transactions or source and preparation of information that affects a relevant financial statement assertion.

Once the auditor identifies what can go wrong, the auditor will look for relevant internal controls that will either prevent them or detect and correct them.