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:

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Awareness and respect of the differences and similarities within and between cultures, enhancing effective communication and interaction.

Developmental Stages

Distinct phases of growth and development that an individual progresses through from infancy to adulthood.

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