The following questions deal with assessing controlrisk in a financial statement audit. Choose the best response.a. When obtaining an understanding of an entity’s internal control procedures, anauditor should concentrate on the substance of procedures rather than their formbecause:(1) the procedures may be operating effectively but may not be documented.(2) management may establish appropriate procedures but not enforce compliancewith them.(3) the procedures may be so inappropriate that no reliance is contemplated by theauditor.(4) management may implement procedures whose costs exceeds their benefits

Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter6: Audit Evidence
Section: Chapter Questions
Problem 11CYBK
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The following questions deal with assessing control
risk in a financial statement audit. Choose the best response.
a. When obtaining an understanding of an entity’s internal control procedures, an
auditor should concentrate on the substance of procedures rather than their form
because:
(1) the procedures may be operating effectively but may not be documented.
(2) management may establish appropriate procedures but not enforce compliance
with them.
(3) the procedures may be so inappropriate that no reliance is contemplated by the
auditor.
(4) management may implement procedures whose costs exceeds their benefits

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