If an Auditor's Risk Assessment Is Based on the Effective

question 405

Multiple Choice

If an auditor's risk assessment is based on the effective operation of controls, the auditor will likely:

• A) Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls.
• B) Perform tests of details of transactions and account balances to identify potential errors and fraud.
• C) Identify specific internal controls that are likely to detect or prevent material misstatements.
• D) Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing.

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Definitions:

Dementia

Dementia is a general term for a decline in mental ability severe enough to interfere with daily life, characterized by deterioration in memory, thinking, behavior, and the ability to perform everyday activities.

Caregiver

An individual who provides assistance or support to a family member, friend, or client with physical, psychological, or developmental needs.

Public Agencies

Government or state-owned entities created to administer specific functions or to deliver public services.

Preventing Frailty

Measures or actions taken to reduce or eliminate the likelihood of becoming weak or vulnerable, especially due to aging.