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An Audit of Internal Control Over Financial Reporting

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An Audit of Internal Control Over Financial Reporting

While the audit of internal control over financial reporting $($ICFR$)$ and the audit of financial statements have different

objectives, the auditor must plan and perform the audit work to achieve the objectives of both audits as an integrated

audit. Using a top$-$down, risk$-$based approach, the auditor should design tests of controls to accomplish the objectives of

both audits simultaneously.

The auditors' objective in an ICFR audit is to express an opinion on the company's internal control over its financial

reporting. To meet this objective, an auditor must plan and perform the audit and obtain reasonable assurance. As a

sequential process, an audit of internal control over financial reporting includes the following five steps $($see Figure $7-2)$: $(1)$

Plan the Audit of ICFR $($P$/$an$)$; $(2)$ Identify controls to test $(/$dentify$)$; $(3)$ Evaluate the design and test the operating

effectiveness of selected controls $($Scope$)$; $(4)$ Evaluate identified control deficiencies $($Evaluate$)$; and $(5)$ Form an opinion

on the effectiveness of the ICFR $($Report$).$

Part $1-$ Drag and Drop

Put the following planning steps of the audit of internal control over financial reporting $($ICFR$)$ in the correct order.

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