The Primary Objective of Compliance Testing in a Financial Statement

question 1

Multiple Choice

The primary objective of compliance testing in a financial statement audit is to determine whether:

• A)Procedures have been updated regularly.
• B)Financial statement amounts are accurately stated.
• C)Internal controls are functioning as designed.
• D)Collusion is taking place.

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Definitions:

Covariance

A statistical measure that indicates the degree to which two variables change together.

Standard Deviation

A statistical measurement that depicts the variability or volatility of an investment's returns.

EAFE Index

The Europe, Australasia, Far East index is a widely used index of non-U.S. stocks.

Weighting

The process of assigning different levels of importance or emphasis to various elements in a calculation or analysis.