Effectiveness of Internal Controls on Reliability
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"The reperformance technique should be used in order to ensure the audit evidence supports the conclusions as reperformance is independent execution of procedures or controls that the auditor can verify the evidence originally generated by the client's system." Our text tells us that "both physical examination and reperformance are likely to be highly reliable if the internal controls are effective... (Arens, et al., 2006, p. 173)" Why would the effectiveness of internal controls impact the reliability of evidence obtained by reperformance?
Reference: Arens, A.A., Elder, R.J., & Beasley, M. S.(2006). Auditing and assurance services: An integrated approach (11th ed.). New York, NY: Pearson.
Level: master in accounting
Answer must be substantive.
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Solution Summary
The solution discusses the effectiveness of internal controls on the reliability of evidence obtained by reperformance.
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Internal Controls:
An internal control over financial reporting which is effective provides a reasonable assurance based on the reliability of financial reporting and financial statements preparation for the purpose of external use. If there has been the existence of any material weakness, the company's internal control over the financial reporting is not considered to be effective (Public Company Accounting Oversight board, 2007).
Evidence which is provided by the test carried out by an auditor concerning the internal controls effectiveness depends more on timing, the mixture of nature, and the extent that the auditors procedures was able to reach. The effectiveness of an internal control would impact the ...
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