When an Auditor Chooses Not to Rely on a Client's

question 82

Multiple Choice

When an auditor chooses not to rely on a client's internal controls because the control design is ineffective,which of the following tests is eliminated?

• A)Substantive testing.
• B)Test of controls.
• C)Test of details of balances.
• D)Substantive analytical procedures.

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Definitions:

Machine-Hours

A measure of the amount of time machines are used in the production process, often used as a basis for allocating overhead costs.

Overhead Applied

The portion of overhead costs allocated to a specific job or project based on a predetermined rate.

Machining Department

A segment of a manufacturing facility where machining processes such as cutting, drilling, or shaping materials are performed.

Machine-Hours

A measure of production time referring to the total hours that machinery is in use during the manufacturing process.