Prior to SOX, external auditors were required to be familiar with the client organization's internal controls, but not test them. Explain.
What will be an ideal response?
Auditors had the option of not relying on internal controls in the conduct of an audit and therefore did not need to test them. Instead auditors could focus primarily of substantive tests. Under SOX, management is required to make specific assertions regarding the effectiveness of internal controls. To attest to the validity of these assertions, auditors are required to test the controls.
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What will be an ideal response?