Which of the Following Statements Best Describes Why an Auditor

question 39

Multiple Choice

Which of the following statements best describes why an auditor would use only substantive procedures to evaluate specific relevant assertions and risks?

• A)The relevant internal control components are not well documented.
• B)The internal auditor already has tested the relevant controls and found them effective.
• C)Testing the operating effectiveness of the relevant controls would not be efficient.
• D)The cost of substantive procedures will exceed the cost of testing the relevant controls.

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Definitions:

Definite Outcomes

Results or effects that are specific, clear, and unambiguous, often anticipated or expected in various contexts.

Temporal Discounting

A preference for immediate gratification over rewards that come later.

Risk Aversion

A behavioral tendency to prefer avoiding losses over acquiring equivalent gains, indicating a preference for certainty and safety.

Certainty Effect

The tendency for people to give greater weight to outcomes that are certain, compared to outcomes that are probable, often observed in decision-making under uncertainty.