In short
In an integrated audit of a public company, the auditor uses a top-down approach to select controls to test: start at the financial statement level, consider entity-level controls, then focus on significant accounts, disclosures and their relevant assertions.
Key takeaways
- It focuses testing on the controls that address the risk of material misstatement.
- Some entity-level controls are precise enough to reduce the testing of other controls.
- Walkthroughs help confirm the understanding of how transactions flow.
Where it's tested
AUD: Understanding the Entity & Internal Control — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In a financial statement audit of a nonissuer, which of the following is required in every audit?