Extended Performance of Tests of Controls Is Most Likely When

question 89

Multiple Choice

Extended performance of tests of controls is most likely when:

• A) controls are ineffective and assessed control risk is high.
• B) the auditor is doing a 'fraud audit'.
• C) controls are effective and assessed control risk is low.
• D) it is a first-year audit.

---

Definitions:

Monthly Compounding

The process where interest on an investment or loan is calculated and added to the principal sum every month.

Payments

Money transferred from one party to another in exchange for goods, services, or to fulfill a contractual obligation.

Account

A record or statement of financial expenditure and receipts relating to a specific period or purpose.

Effective Rate

The actual interest rate an investor receives or pays after the effects of compounding interest and all charges are considered.