Understanding Internal Controls Evaluation in Auditing

Understanding Internal Controls Evaluation in Auditing

Assessment

Interactive Video

Business

University

Hard

Created by

Quizizz Content

FREE Resource

The video tutorial explains the process of evaluating internal controls as part of assessing control risk. It covers the auditor's approach to understanding client controls using a top-down method, focusing on significant accounts and risky areas. The tutorial details the steps of starting with entity-level controls, conducting walkthroughs, and documenting the understanding through narratives, flow charts, or questionnaires. It also discusses making a preliminary control risk assessment and testing relevant controls to ensure they function effectively.

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5 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary goal of an auditor when evaluating internal controls?

To evaluate the client's market position

To learn about the client's financial statements

To assess the client's profitability

To understand and document the client's controls

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which approach is used by auditors to focus on significant accounts and relevant assertions?

Bottom-up approach

Sideways approach

Random approach

Top-down approach

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a walkthrough in the context of evaluating internal controls?

A physical tour of the client's office

A process of understanding and assessing controls in place

A method to calculate financial ratios

A way to interview the client's employees

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which method is NOT used to document the understanding of internal controls?

Financial statement analysis

Narrative

Flow chart

Internal controls questionnaire

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the purpose of testing relevant controls during the control risk assessment?

To ensure they are functioning properly

To improve the client's profitability

To increase the client's market share

To reduce the client's tax liability