If the Auditor Determines That Internal Controls Are Not Functioning

question 47

Multiple Choice

If the auditor determines that internal controls are not functioning as designed, and a compensating control does not exist, the auditor will assess control risk and the risk of material misstatement (RMM) as_______.

• A)high and set detection risk as low
• B)low and set detection risk as low
• C)high and set detection risk as high
• D)low and set detection risk as high

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Definitions:

Property Distribution

The division of assets and properties among parties, often in the context of estate planning, divorce, or dissolution of partnership.

Trust Agreement

A legal document that outlines the terms and conditions under which property is managed and held by a trustee for the benefit of another party.

Testamentary

Relating to or bequeathed through a will.

Charitable

Relating to or aimed at helping others through donations or volunteer work without the expectation of financial gain.