Option #1: Understanding of Internal Controls – Approaches
Every audit firm has its approach for understanding a client’s internal control structure. Some firms use a standardized internal control questionnaire to evaluate controls that are in place whereas other firms do not rely on internal controls at all and plan their audits as if there are no controls in place or consider controls as not effective.
Evaluate each of these approaches to assess a client’s internal controls from an external auditor’s perception. Include in your evaluation:
What effect, if any, does the size of the organization have on the decision?
What are the auditing standard requirements for obtaining an understanding of internal controls?
What are the differences, if any, in understanding internal controls for a public company versus a non-public company?
Prepare a report evaluating each approach. Also include your opinion on which approach is better and why.
Write a paper of 4-6 pages in length, not counting the title and reference pages, which you must include.
Use terms, evidence, and concepts from class readings, including professional business language.
Cite at least 3 credible, academic, or professional sources for this assignment, outside of the textbook. The CSU Global Library (Links to an external site.) is a great place to find resources.
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