When a Compensating Control Exists, a Deficiency in the System

question 11

Multiple Choice

When a compensating control exists, a deficiency in the system:

• A) is reduced but not removed; therefore, it is still of concern to the auditor.
• B) is no longer a concern because the potential for misstatement has been sufficiently reduced.
• C) could cause a material loss, so it must be tested using substantive procedures.
• D) is magnified and must be removed from the sampling process and examined in its entirety.

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Definitions:

Costs

Represents the value of resources used in the production of goods and services, often associated with expenses incurred by businesses.

Cultural Differences

Variations in practices, beliefs, and values among different societies or groups of people.

France

A country located in Western Europe known for its rich history, culture, and contributions to art, science, and philosophy.

China

A country located in East Asia, known for being the world's most populous nation and having one of the largest economies globally.