The Relationship Between the Required Understanding of the Internal Control

question 20

Multiple Choice

The relationship between the required understanding of the internal control structure and the preliminary audit strategy is that:

• A) normally, greater understanding is required when the lower assessed level of control risk approach is used.
• B) normally, greater understanding is required when the primarily substantive approach is used.
• C) no understanding is required in the planning stage unless tests of controls are a planned part of the strategy.
• D) normally, less understanding is required when the lower assessed level of control risk approach is used.

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Definitions:

Contribution Principle

The idea that individuals should contribute to society or a system in proportion to their abilities or benefits received.

Categorical Imperative

The categorical imperative is a central concept in the moral philosophy of Immanuel Kant, which posits that one should act only according to that maxim whereby you can at the same time will that it should become a universal law.

Supreme Principle

The foundational or highest-ranking rule that guides ethical, legal, or philosophical theories and practices.

Happiness

A state of well-being characterized by emotions ranging from contentment to intense joy.