After Obtaining an Understanding of Internal Controls and Assessing Control

question 56

Multiple Choice

After obtaining an understanding of internal controls and assessing control risk on the audit of a non-public company, an auditor decided to perform tests of controls. The auditor most likely decided that:

• A)it would be efficient to perform tests of controls that would result in a reduction in planned substantive tests.
• B)additional evidence to support a further reduction in control risk is not available.
• C)an increase in the assessed level of control risk is justified for certain financial statement assertions.
• D)there were many internal control weaknesses that could allow errors to enter the accounting system.

Apply ratio and proportion knowledge to calculate overhead allocations and refund amounts.

Evaluate and solve problems involving additional investments to maintain original investment ratios.

Calculate the required increase in resources to meet specified ratios.

Understand the impact of currency value changes on exchange rates.

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Definitions:

Years Of Experience

Years of experience refer to the length of time an individual has spent in a certain field or occupation, indicating their level of expertise.

T-Table Values

These refer to values derived from the t-distribution, used in hypothesis testing and confidence interval estimation.

Expected Value

The long-run average value of repetitions of an experiment it represents.

Metric System

A decimal system of weights and measures based on the meter, liter, and gram as units of length, capacity, and weight or mass, respectively.