Page 7 - Audit Day 3 - Class Slides
P. 7
ISA 315
• Stipulates that the auditor shall obtain an understanding of
internal control relevant to the audit. Internal control is designed
and implemented to deal with identified business risks that
threaten the achievement of any of the above objectives. When
the auditor obtains an understanding of internal control, he/she
has to (ISA 315, par 13) do the following:
• Evaluate the design of those controls. Does a control (individually or in
combination with others) effectively prevent, or detect and correct
material misstatements?
• Determine whether these controls have been implemented. It is no
use having brilliant controls in theory if they are not implemented and
used effectively by the entity. Inquiry from the entity’s personnel alone
is not sufficient. Other procedures (e.g. observation, inspection, etc)
have to be performed as well.
It is a matter of the auditor’s professional judgement whether a control,
individually or in combination with others, is relevant to the audit.
