Final answer:
The auditor should focus on key controls because they are critical for preventing or detecting material misstatements, leading to an effective and efficient audit.
Step-by-step explanation:
The auditor should identify and include only key controls since they will be sufficient to achieve the transaction-related audit objectives and will also provide audit efficiency. In the context of an audit, key controls are those controls that are essential for preventing or detecting material misstatements in the financial statements.
By focusing on these controls, auditors can conduct an efficient and effective audit, ensuring that they are addressing the most significant areas of risk. While 'significant' and 'material' are also terms related to auditing, 'key' is the word that is typically used in relation to controls because it denotes the importance of these controls in the context of the audit objectives.
The auditor should identify and include only:
significant controls
Significant controls are those that, if they fail to operate effectively, could result in a material misstatement in the financial statements.
By focusing on significant controls, the auditor aims to achieve transaction-related audit objectives and enhance audit efficiency, ensuring that the most critical aspects of internal control are assessed for their impact on the financial statements.