If Testing the Operating Effectiveness of Controls Surrounding an Estimate

question 79

Multiple Choice

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

• A)the auditors should consider increasing the risk and cost associated with the audit
• B)auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates
• C)auditors also conduct substantive procedures on the reasonableness of accounting estimates
• D)the auditors should disregard testing of controls completely, and instead focus on substantive testing

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Definitions:

Basic Nature

The fundamental qualities or characteristics inherent in something or someone, often considered innate or essential.

Heraclitus

An ancient Greek philosopher known for his doctrine that change is the fundamental essence of the universe, famously captured in the phrase "You cannot step into the same river twice."

Electrical Charges

A fundamental property of matter that causes it to experience a force when placed in an electromagnetic field. There are two types: positive and negative.

Emptiness

In philosophic and spiritual contexts, a concept highlighting the absence of inherent existence or essence in phenomena; in everyday use, the state of being empty.