Upon Consideration of a Client's System of Internal Control, When

question 95

Multiple Choice

Upon consideration of a client's system of internal control, when an auditor identifies areas with weaknesses, ________.

• A)reduced substantive testing in this area will be appropriate to reach the desired level of assurance
• B)increased substantive testing in this area will be appropriate to reach the desired level of assurance
• C)the auditor should document the weaknesses and refer to them during next year's audit
• D)the auditor should disclaim an opinion on those areas

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information, leading to price-takers behavior.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market equilibrium.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and free entry and exit.

Free Entry

A market condition where there are no barriers to entering an industry or market, allowing any firm to compete without restrictive licenses, patents, or regulations.