(i) Impact on the final audit of performing work on internal controls at an interim audit:

• If the auditor has tested and obtained evidence about the operating effectiveness of internal controls during the interim audit, they may reduce the extent of testing at the final audit. This is because the interim audit provides assurance that controls have operated effectively up to that point.
• The final audit will focus on obtaining audit evidence about any significant changes to internal controls between the interim audit and year-end. The extent of additional testing needed at the final audit is determined by any modifications in controls, processes, or personnel during the remaining period.

(ii) Factors the auditor should consider when determining the extent of further work on internal controls at the final audit:

1. Significance of Risk: The auditor should consider the assessed risks of material misstatement at the assertion level. Higher risk areas may require additional testing.
2. Changes in Controls: Any significant changes to controls, processes, or personnel since the interim audit should prompt further testing to ensure continued effectiveness.
3. Extent of Audit Evidence: The degree to which sufficient audit evidence was obtained during the interim audit affects how much additional work is necessary at the final audit.
4. Length of the Remaining Period: The length of time between the interim audit and year-end should be considered. A longer period increases the likelihood of changes in controls, requiring additional testing.
5. Reduction in Substantive Procedures: The extent to which the auditor intends to reduce substantive procedures based on reliance on controls will influence the scope of further internal control work.
6. Strength of the Control Environment: The auditor must evaluate the overall control environment, including management’s attitude towards internal controls, which could affect the need for additional testing.