Question

The sequence of steps in the auditor's consideration of internal control is as follows:

• A. Obtain an understanding, design substantive test, perform tests of control, make a preliminary assessment of control risk
• B. Design substantive tests, obtain an understanding, perform tests of control, make a preliminary assessment of control risk
• C. Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures
• D. Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

Answer 1

The correct option is C Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures

Internal Control is like a pulse for any organisation, which shows where could be the flaw points.

The first step towards anything is obtaining an understanding.

After which assessment needs to be done and then tested.

Procedures needs to be designed for further analysis and improvement.