Ch 3 · Risk Assessment & Internal Control

📘 Core concepts

1. 1SA 315 — Identify & assess Risks of Material Misstatement (RoMM).
2. 2Components of internal control: Control Environment, Risk Assessment, Information System, Control Activities, Monitoring.
3. 3Walkthrough tests confirm understanding of system; ToC tests operating effectiveness.
4. 4Inherent risk × Control risk = RoMM; detection risk inversely proportional to RoMM.
5. 5Auditor's response (SA 330): overall responses + further audit procedures (test of controls + substantive).