LESSON _5

LESSON _5 - 5.5 An audit committee is a subcommittee of the...

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5.5 An audit committee is a subcommittee of the board of directors composed of independent members. The audit committee is responsible for the financial reporting and disclosure process. The committee should encourage fair reporting from the perspective of the stockholders, creditors, and employees. The audit committee should meet regularly with the external and internal auditors, providing for the independence of the external and internal auditors. 5-9 The three general types of audit tests are risk assessment procedures, tests of controls and substantive tests. Risk assessment procedures are used by the auditor to obtain an understanding of the entity and its environment, including internal control. Examples include inquiries of management and others, analytical procedures, and observation and inspection. Tests of controls are audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level. Examples of tests
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LESSON _5 - 5.5 An audit committee is a subcommittee of the...

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