If the Test Results Do Not Confirm the Preliminary Evaluation

question 75

Multiple Choice

If the test results do not confirm the preliminary evaluation of controls, _______.

• A)the auditor will consider whether there is a compensating control that might prevent and correct a misstatement missed by the original control being tested
• B)the auditor will consider whether there is a compensating control that might detect and correct a misstatement missed by the original control being tested
• C)the auditor should obtain additional written assurances from management
• D)the auditor should consider withdrawing from the engagement

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by recognizing income in proportion to their ownership percentage.

Cash Dividends

The allocation of a part of a corporation's profits, determined by its board of directors, to a group of its stockholders as cash.

Comprehensive Income

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. It encompasses net income and other comprehensive income items.

Interest Revenue

Income earned on investments, such as loans and securities, over a period.