When Tests Internal Controls Do Not Support a Previous Conclusion

question 25

Multiple Choice

When tests internal controls do not support a previous conclusion about internal controls, the auditor should _______.

• A)obtain assurances about internal control from senior management
• B)reassess internal controls at a higher level
• C)consider withdrawing from the engagement
• D)lower inherent risk related to internal control

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Definitions:

Treasury Stock

Shares that were previously issued and outstanding but have been repurchased by the issuing company, reducing shareholders' equity.

Noncash Activities

Transactions that do not involve direct cash flow, such as depreciation or stock-based compensation.

Financial Statements

Structured reports that detail the financial performance, position, and cash flows of a company, including the balance sheet, income statement, and cash flow statement.

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and other investments not classified as cash equivalents.