In an Environment That Is Highly Automated, an Auditor Determines

question 258

Multiple Choice

In an environment that is highly automated, an auditor determines that it is not possible to reduce detection risk solely by substantive tests of transactions. Under these circumstances, the auditor most likely would:

• A) Perform tests of controls to support a lower level of assessed control risk.
• B) Increase the sample size to reduce sampling risk and detection risk.
• C) Adjust the materiality level and consider the effect on inherent risk.
• D) Apply analytical procedures and consider the effect on control risk.

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Definitions:

General Form

A standard way to write equations that allows for easy identification of key components.

Points

Defined locations in space, often represented as coordinates in a geometric or algebraic context.

Linear Depreciation

A method of allocating the cost of a tangible asset over its useful life in a linear, or evenly spread, manner.

Depreciates

To decrease in value over time, typically used in reference to assets or property.