Every 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 them as not effective.
Assume you are training a new team of auditors for your CPA firm. Prepare a PowerPoint presentation to present the pros and cons of each approach. Then, select the approach that your firm uses (that is, the approach you think is best) and explain why. Include the following components in your presentation:
What effect, if any, does the size of the organization have on the decision?
What are the auditing standard requirements for obtaining an understanding of internal controls?
What are the differences, if any, in understanding internal controls for a public company versus a non-public company?
Your presentation should meet the following criteria:
Be 6-8 slides in length, not including the title and references slides.