Understanding Components of Internal Control and Assessing the Level of Control

question 21

Multiple Choice

Understanding components of internal control and assessing the level of control risk are primarily used by the auditor to:

• A) determine whether procedures and records concerning the safeguarding of assets are reliable.
• B) modify the initial assessments of inherent risk and preliminary judgements about materiality levels.
• C) determine the nature, timing, and extent of substantive tests for financial statement assertions.
• D) ascertain whether the opportunities to allow any person to both perpetrate and conceal irregularities are minimised.

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Definitions:

Quality

The measure of how a product or service either meets or surpasses the anticipations of customers.

Geographical Adjustments

Modifications or changes made to strategies or operations based on geographic locations or conditions.

FOB Origin Pricing

A pricing term indicating that the buyer takes responsibility for the goods and shipping costs from the seller's location, bearing all risks.

Spider Web Pricing

A pricing strategy that involves setting a low price for one product to attract customers and then raising prices once the customer engagement has been established.