After Obtaining an Understanding of the Internal Control System and Assessing

question 8

Multiple Choice

After obtaining an understanding of the internal control system and assessing control risk, an auditor decided not to perform additional tests of controls.The auditor most likely concluded that the

• A)Additional evidence to support a further reduction in control risk was not cost-beneficial.
• B)Assessed level of inherent risk exceeded the assessed level of control risk.
• C)Internal control system was properly designed and justifiably may be relied on.
• D)Evidence obtainable through tests of controls would not support an increased level of control risk.

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Definitions:

Margin of Error

An expression of the amount of random sampling error in a survey's results.

Binomial Populations

Groups of individuals or events subjected to a binomial experiment, where outcomes are categorized into two distinct categories.

Independent Random Samples

Groups of randomly selected samples from a population where the selection of an item for one sample does not influence the selection for another sample.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly the mean, which provides a measure of its precision.