Question

When assessing control risk, an auditor is required to document the auditor's:

Understanding of the Entity's Control Environment | Basis for the Auditor's Risk Assessment

(1) Yes No

(2) No Yes

(3) Yes Yes

(4) No No

*Note: The first column of Y/N is for Understanding of the Entity's Control Environment, and the second column is for Basis of the Auditor's Risk Assessment.

Answer 1

When assessing control risk, an auditor is required to document the auditor's

Understanding of the environment- YES

Basis for the auditor's risk assessment- YES

Control assessment refers to process of evaluating the effectiveness of company's internsl control structurein detecting and preventing the material misstatement.

The first step in assesment of control risk is to obtain and document the understanding of design and operation of internal controls.

And next step is to assess the control risk basis various documents collected.