Every audit firm has its approach for understanding a client’s internal control structure.

Every audit firm has its approach for understanding a client’s internal control structure. Some firms use a standardized internal control questionnaire to evaluate controls that are in place whereas other firms do not rely on internal controls at all and plan their audits as if there are no controls in place or consider controls as not effective.

Evaluate each of these approaches to assess a client’s internal controls from an external auditor’s perception. Include in your evaluation:

  1. What effect, if any, does the size of the organization have on the decision?
  2. What are the auditing standard requirements for obtaining an understanding of internal controls?
  3. What are the differences, if any, in understanding internal controls for a public company versus a non-public company?

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