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Unformatted text preview: misstated. Chapter 6 covers
the role of internal control in a ﬁnancial statement audit, and Chapter 7 speciﬁcally addresses the audit of internal control for public companies. Later chapters
apply the process of considering and auditing internal control in the context of
various business processes.
Audit Business Processes and Related Accounts Auditors usually organize audits by grouping ﬁnancial statement accounts according to the business
processes that primarily affect those accounts. For example, sales revenue and
accounts receivable are primarily affected by a company’s sales and collection
process, and are audited together. The auditor applies audit procedures to the
accounts in order to reduce the risk of material misstatement to an appropriately
low level. Individual audit procedures are designed to produce evidence relating to speciﬁc assertions in the account balances that are likely to be misstated.
For example, if the auditor is concerned about the possibility of obsolete inventory, the auditor could gather evidence to determine if the inventory on hand is
properly valued at the lower of cost or market. On most...
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