The Auditor May Decide NOT to Reduce Assessed Control Risk

question 102

Multiple Choice

The auditor may decide NOT to reduce assessed control risk even if internal controls are adequate. This approach is followed if:

• A) the cost of the study and tests of controls will exceed the savings from reduced substantive procedures.
• B) the auditor plans to rely on the controls and reduce substantive testing.
• C) a qualified opinion will be issued.
• D) All of the above are true.

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Definitions:

Benefits Systems

Organized programs offered by employers to provide their employees with financial protection and assistance in health, retirement, and other aspects of personal welfare.

Cost Break-even Analysis

An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue.

Competitive Analysis

A process of evaluating the strengths and weaknesses of competitors in the market to identify opportunities and threats.

Golden Parachutes

Golden parachutes are sizable benefits guaranteed to company executives if they are removed from their position or the company is taken over.