Final answer:
An auditor obtains audit evidence about control risk by using techniques like inspecting documents and records, inquiring with management and staff, observing operations, and reperforming certain controls. Interviewing employees, inspecting processes, and reviewing reports are ways to understand and assess the company's internal control system's effectiveness.
Step-by-step explanation:
To obtain audit evidence about control risk, an auditor selects tests from a variety of techniques, including inspecting documents and records, making inquiries of management and staff, and observation and inspection of a company's operations and processes. Additional techniques could involve reperformance of certain controls, to ensure their effectiveness, or analytical procedures to detect any unusual transactions that could indicate control issues. When examining control risk, it is essential for an auditor to understand how a company's internal controls operate and whether they are designed adequately to prevent or detect errors or fraud promptly.
Among the methods used to gather necessary information, auditors may rely on interviewing employees to understand daily procedures and control activities. They may also observe the physical processes in place to ensure they operate as described in documentation and policies. Another element could be the examination of reports generated by the company's information system to confirm that transactions are being captured and reported accurately. The objective of these procedures is to determine if the control environment is functioning as intended and if it can be relied upon to mitigate risks associated with financial reporting.