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:

Private Sector

The part of the economy that is run by individuals and companies for profit and is not under direct governmental control.

Weingarten Rights

The rights of employees to have union representation during investigatory interviews that they believe could result in disciplinary action.

Union Workers

Employees who are members of a labor union, which represents their interests in negotiations with employers over wages, working conditions, and benefits.

Disciplinary Meeting

A formal meeting between an employee and management to discuss misconduct or performance issues, potentially leading to disciplinary actions.