The Auditor Is Performing Substantive Tests Several Months Before the End

question 28

Multiple Choice

The auditor is performing substantive tests several months before the end of the year. This most likely means that:

• A) inherent risk is set at moderate to high.
• B) detection risk is set at low to very low.
• C) control risk is set at slightly below maximum to maximum.
• D) control risk is set at maximum.
• E) detection risk is set at moderate to high.

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Definitions:

Cross-Dock Facility

A logistics strategy where incoming materials are unloaded directly from suppliers' trucks and immediately loaded onto outbound trucks, reducing storage time and costs.

Operating Costs

Expenses associated with the day-to-day functioning of a business, excluding the cost of goods sold.

High Demand

A condition in which the need or market request for a product or service surpasses usual or anticipated levels.

Decision Tree Analysis

A graphical representation used to make decisions, showing different outcomes based on various choices and chance events.