TEST OF CONTROLS POINT NO.1 "AUDITORS ASSESSMENT OF RMM AT ASSERTION LEVEL INCLUDES EXPECTATION THAT CONTROLS ARE OPERATING EFFECTIVELY" BUT AS PER SA 315 RMM IS A FUNCTION OF IR AND CR. IN IR WE ASSUME NO INTERNAL CONTROL SYSTEM SO WHY WE ARE EXPECTING THAT CONTROLS ARE OPERATING EFFECTIVELY IN ABOVE POINT?

Questions › Category: SA-330 › TEST OF CONTROLS POINT NO.1 "AUDITORS ASSESSMENT OF RMM AT ASSERTION LEVEL INCLUDES EXPECTATION THAT CONTROLS ARE OPERATING EFFECTIVELY" BUT AS PER SA 315 RMM IS A FUNCTION OF IR AND CR. IN IR WE ASSUME NO INTERNAL CONTROL SYSTEM SO WHY WE ARE EXPECTING THAT CONTROLS ARE OPERATING EFFECTIVELY IN ABOVE POINT?

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sagar goenka asked 6 years ago

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Ravi Staff answered 6 years ago

First of all risk assessment occurs at initial stages of audit, at this we are not sure about things we just fell or say guess how things will be.
now we predict RMM = IR x CR
In IR we dont consider effect of internal controls
But in CR we consider effect of internal controls, we predict whether controls would be operating effectively
so while determining RMM, CR is considered that means effect of controls is taken in to consideration.