Which of the following is a device designed to help the audit team obtain evidence about the accounting and control activities of the client?
a. all of the answers are correct
b. an internal control questionnaire
c. a flowchart of the documents and procedures used by the company
d. a narrative memorandum describing the control system
Answer: b. an internal control questionnaire
The primary purpose for obtaining an understanding of a nonpublic audit client's internal control is to
a. provide the rational for the inherent risk assessment at the financial statement assertion level
b. provide information for a communication of internal control-related matters to management
c. provide a basis for making constructive suggestions in a management letter
d. determine the nature, timing and extent of tests to be performed in the audit
Answer: d. determine the nature, timing and extent of tests to be performed in the audit
The most important fundamental component of an entity's internal control is
a. reliability of financial reporting
b. people who operate the control system
c. compliance with laws and regulations
d. effectiveness and efficiency of operations
Answer: b. people who operate the control system
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