Audit Staff Training for New Senior Accountants—Part 4, Evaluating Internal Control and Designing Audit Strategies During Normal and Difficult Times 

CPE Credit: 2 hours

Professional standards require an auditor to obtain an understanding of a client’s entity and environment, including its internal control. Unable to default to high control risk and perform only analytical and tests of balances procedures, an auditor is required to obtain the understanding, identify and evaluate risks of material misstatement due to error and fraud and link the risks to appropriate substantive procedures to prevent financial statements from being materially misstated. Understanding and documenting internal control is integral to this process, which is called the audit strategy. In-charge accountants are usually responsible for the risk assessment procedures and for the development of a cost-efficient audit strategy. These responsibilities are the focus of these materials. 

LEARNING OBJECTIVES
• Learn to distinguish between key controls, entity-level controls and activity-level controls.
• Learn how to design the most efficient internal control documentation.
• Understand how the relationship between risks of material misstatement and types of tests can create efficiencies on audit engagements.
• Know how to relate assertions and risks of material misstatement by financial statement classification to reduce overall evidence requirements.
• Consider the effects of pandemics, natural disasters and business environmental changes on reporting entities internal control.