Question

Go to the Public Company Accounting Oversight Board (PCAOB) Website to review the internal control requirements (Auditing Standard No. 5), located athttp://pcaobus.org/Featured/Pages/InternalControls.aspx and comment on which you feel is most important and why.

Answer 1

Under the Internal Audit requirements while going through an audit of Internal Control over Financial Reporting, the most important function is the "Obtaining sufficient evidence to support control risk assessments".

The auditor has to access the overall control on having the control on the accounts and finance alongwith the financial statement. By doing so the internal auditor put the limits on its working areas to access the control. The accessment of the auditor towards "operating effectiveness of control" areas would be supported by the evidences. The auditor places these evidences in support of his/her comments in the audit report on the accounts and finance function areas which are do not his/her attention.

The elimination of the effective control areas will allow the auditor to concentrate on the areas which are more critical and require more auditor's attention. This will reduce the amount of audit work and the ineffective areas are more explored to bring out the weaknesses alongwith the evidence.

This not only make the auditors work smooth but also suppliing a good and condusive audit report in which the ineffective areas are much explored and reported.

===================