97431-12-1RQ

<TO-DETERMINE>

Identify the responsibility of an auditor for obtaining the understanding of internal

control. Also, differentiate between the responsibility of an auditor for public and non
public company.

</TO-DETERMINE>

<EXPLANATION>

The auditor is responsible for obtaining understanding about internal of an organization

before conducting audit procedures. To obtain an understanding about the client’s
internal control following are the responsibilities performed by the auditor:

 The auditor procures and documents the understanding of the internal control
design and its implementation within the organization.

 The auditor assesses the control risk which the organization may possess. The
auditor assesses the control risk to decide about the control testing and audit
design.

 The auditor design, perform and evaluate the test of control.

 Lastly, the auditor takes decisions regarding the planned detection risk and
substantive testing.

The criteria of understanding the internal control for public and non public company were
similar. The extent of understanding in the large public or non-public organization
depends on the complexity of the system and the extent of internal control activities
performed by the organization.

</EXPLANATION>