A Deficiency in an Operation Exists When ________

question 15

Multiple Choice

A deficiency in an operation exists when ________.

• A)a properly designed control does not operate as designed or the person performing the control does not possess the necessary authority or competence to perform the control effectively
• B)properly designed control operates as designed and the person performing the control possesses the necessary authority or competence to perform the control effectively
• C)it has become clear to the auditor that performance of the operation creates significant risk that a material misstatement will not be detected by the client system
• D)an improperly designed control does not operate as designed or the person performing the control possesses the necessary authority or competence to perform the control effectively

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Definitions:

Fixed Costs

Expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Cash Flow

The full measure of money movement into and out of an organization, primarily altering its liquidity status.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, reflecting the risk and time value of money.

Initial Cost

The total expense incurred to acquire an asset or start a project, including purchase price and all associated fees.