[EDM1204]

1. I am really having a hard time understanding the meaning with the team “assessing control risk at maximum” and “assessing control risk below the maximum” how do you get that and what happens when they are assessed above or below maximum?

2. Internal control over financial reporting. I’ve seen some questions about if you’re looking at internal control how can you do both financial statement testing and internal control testing at the same time. (Might be a bad explanation i just did but hopefully someone will understand what i mean).

3. Management Assertions mainly the Completeness. Can someone explain this to me in a “Management Assertions for Dummies” type of way?

There is probably more that I need help understanding but this is all I can think of right now. Probably will be posting more that I think of until Friday (test Saturday). Thanks Ninjas in advance!

F- 78
A- 70, 69, 74, 70
R- 68, 70
B- 76

[Biff-1955-Tannen]

1. When you initially assess the internal controls you can do it by pretty much evaluating how management has assessed the internal controls, use questionnaires, etc. After you make your initial assessment of the controls, if you think that they are too deficient to rely on you will assess them at maximum. Because you've assessed them at maximum there is no point in testing the controls yourself because you don't believe testing them will lower the initial assessment any. If you assess them below the maximum you will do tests of controls to justify assessing them below maximum and/or reduce the assessment even more.

2. A “dual purpose” test is just a procedure that will happen to be a test of controls as well as a test of detail simultaneously.

3. Completeness assertion is just looking to see that whatever event or transaction has been recorded in the books. So for example you're touring a plant and you see a piece of machinery. Lets just trace this machine number back to the ledger and make sure it is recorded.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Author]

Replies