Problem
A. Define the term "internal control" and identify the major components of an internal control system.
B. The auditor identifies four phases or steps in the control risk assessment procedure. Phase I involves obtaining an understanding of the internal control structure. Identify at least four methods the auditor might use in gathering the information and briefly describe each one.
C. Auditors must document their understanding and evaluation of the internal control system. Identify and briefly describe the three most commonly used methods for such documentation.
D. Discuss the impact of control risk assessment on an audit of the financial statements.