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:

Perceptual Constancies

The tendency to perceive objects as unchanging, despite changes in sensory input, such as changes in illumination, angle, or distance.

Bottom-Up Processing

A perceptual approach where processing begins with the sensory input and works up to the formation of a perceptual experience.

Perceptual Hypotheses

A theory in psychology suggesting that perception involves the brain's activity of generating theories about what objects in the external world are most likely to account for the sensory information it receives.

Binocular Depth Cues

Visual information that the brain uses to determine the depth and distance of objects, requiring both eyes.