Answer:
by understanding the entity and the business and determining the risk of material fraud or error at the financial statement level.
Explanation:
An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.
Internal controls can be defined as the policies, set of rules, and procedures implemented or put in place by an organization to protect its assets, boost efficiency, enhance financial accountability, enforce adherence to company policies and prevent fraudulent behaviors among the employees.
The main purpose of internal controls is to guarantee that loss is eliminated by ensuring that there is an accurate and reliable accounting system.
An internal control involves the timely use of both internal and external sources of auditing or financial reporting and as such enhance the maintenance of accurate and proper financial records which would also improve their operational efficiency.
Hence, internal controls if properly executed helps to increase operational efficiency, protect and safeguard assets, provides accurate financial information, prevents fraudulent or unlawful behaviors, timeliness of financial records and reporting.
In order to start the selection of controls to test, an auditor has to understand the entity and the business, as well as determine the risk of material fraud or error at the financial statement level.
Financial statements can be defined as a document used for the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors. These includes balance sheet, statement of retained earnings and income statement.
A standard unmodified opinion is an opinion where financial statements are presented free of any misinterpretation, in all material respects, in accordance with standards known as Generally Accepted Accounting Principles (GAAP) to provide a high level of assurance.
The standard unmodified opinion comprises of report title, audit report address, introduction paragraph, managements responsibility, auditor's responsibility, opinion paragraph, audit report date and signature and address of certified public accountant firm.
Additionally, an unmodified opinion on financial statements can be defined as an opinion issued by an auditor stating that there are no material misstatements and this simply implies that the, the financial statement represents a true and fair perspective of the accounting information of a business.
