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:

Short-Term Obligation

Debt or financial obligations due within one year.

Payroll Taxes

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Employee

An individual who works part-time or full-time under a contract of employment, contributing labor and expertise to an employer.

Employer

An individual or organization that hires and pays people to work.