Why must the auditor obtain an understanding of internal control?

The auditor should obtain an understanding of each of the five components of internal control in order to plan the audit. This understanding includes knowledge about the design of relevant controls and whether they have been placed in operation by the entity. The auditor uses this knowledge to: 

• Identify the types of potential misstatement.
• Pinpoint the factors that affect the risk of material misstatement.
• Design tests of controls and substantive procedures.