Aid for identifying and testing controls at smaller entities

Under AU-C section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, as amended by Statements on Auditing Standards No. 145, by the same name, auditors should evaluate whether controls are designed effectively to address the risk of material misstatement at the assertion level or effectively designed to support the operation of other controls. Further, the auditor should determine whether the control has been implemented by performing procedures in addition to inquiry of the