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PSA 315 Internal Control Monitoring

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Questions and Answers

What is the auditor required to obtain an understanding of, according to PSA 315 paragraph 24 (Revised 2019)?

The entity's management accounting information

The entity's financial statements preparation process

The entity's risk assessment procedures

The entity's internal control monitoring process (correct)

In less complex entities, what is the focus of the auditor's understanding of the entity's process to monitor the system of internal control?

Involvement of management or owner-manager in operations (correct)

Prevention of control deficiencies

Formal monitoring processes

Complaints from customers

What may alert the owner-manager to issues with the timing of when customer payments are being recognized in the accounting records in owner-manager entities?

Employee turnover rate

Inaccuracies in monthly statements (correct)

Delayed shipments to customers

Customer complaints about product quality

For entities with no formal process for monitoring the system of internal control, what does understanding the process include?

Regular financial statement reviews Signup and view all the answers

What aspects of the entity’s process does the auditor need to understand, according to PSA 315 paragraph 24 (Revised 2019)?

Ongoing and separate evaluations for control effectiveness Signup and view all the answers

What is often focused on in less complex entities' process to monitor the system of internal control?

Involvement of management or owner-manager in operations Signup and view all the answers

What should the auditor consider regarding the design of the monitoring activities?

Whether it is periodic or ongoing monitoring Signup and view all the answers

In what way should the results of the monitoring activities be evaluated?

On a timely basis to determine whether the controls have been effective Signup and view all the answers

What might be considered by the auditor regarding the entity's process to monitor the system of internal control in relation to IT?

Controls to monitor complex IT environments that evaluate the continuing design effectiveness of information processing controls and modify them, as appropriate, for changes in conditions Signup and view all the answers

What does ISA 610 (Revised 2013) apply to?

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What helps the auditor obtain an understanding of the nature of the internal audit function's responsibilities?

Reviewing the internal audit functions audit plan for the period Signup and view all the answers

What can provide information that is directly relevant to the auditor's identification and assessment of the risks of material misstatement?

The information obtained from the auditor's inquiries Signup and view all the answers