Auditors Follow a Four- Step Approach to Reduce Assessed Control

question 4

Multiple Choice

Auditors follow a four- step approach to reduce assessed control risk. Which order do these four steps go in? 1. Identify key controls that should reduce control risk for each transaction- related audit objective.
2) Apply the transaction- related objectives to the class of transactions being tested.
3) Develop appropriate tests of controls for all internal controls that are used to reduce the preliminary assessment of control risk below maximum (key controls) .
4) For potential types of misstatements related to each transaction- related audit objective, design appropriate substantive tests of transactions.

• A) 4, 1, 2, 3
• B) 1, 3, 2, 4
• C) 2, 1, 3, 4
• D) 1, 2, 3, 4

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Definitions:

Evolutionary Theory

A scientific theory that explains the diversity of life on Earth through processes of natural selection and genetic variation.

Control Group

In experimental research, the group of participants that does not receive the experimental treatment, used as a baseline to compare the effects of the treatment on the experimental group.

Confound

A variable that influences both the dependent and independent variables in an experiment, making it difficult to determine the exact effect of the independent variable.

Critical Thinking

Making reasoned judgments about claims.