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(discussed next). This assessment of internal control will be in greater depth
if the client is a public company, because for public companies the auditor is
required to report on both the company’s internal control over ﬁnancial reporting and the company’s ﬁnancial statements. The outcome of the auditor’s planning process is a written audit plan that sets forth the nature, extent, and timing
of the audit work. Chapters 3, 4, and 5 cover the issues that are involved in this
phase of the audit.
Consider and Audit Internal Control Internal control is designed and
effected by an entity’s board of directors, management, and other personnel to
provide reasonable assurance regarding the achievement of objectives in the following categories: (1) reliability of ﬁnancial reporting, (2) effectiveness and efﬁciency of operations, and (3) compliance with applicable laws and regulations.
When obtaining an understanding of the entity and its environment, the auditor
obtains an understanding of internal control to help the auditor assess risk and
identify areas where ﬁnancial statements might be...
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