Auditors Follow a Four-Step Approach to Reduce Assessed Control Risk

question 6

Multiple Choice

Auditors follow a four-step approach to reduce assessed control risk.What is the order of these four steps?
1) Identify key controls that should reduce control risk for each transaction-related audit objective.
2) Apply the transaction-related objectives to the class of transactions being tested.
3) Develop appropriate tests of controls for all internal controls that are used to reduce the preliminary assessment of control risk below maximum (key controls) .
4) For potential types of misstatements related to each transaction-related audit objective, design appropriate substantive tests of transactions.

• A) 1, 2, 3, 4
• B) 4, 1, 2, 3
• C) 2, 1, 3, 4
• D) 1, 3, 2, 4

Understand the concept of market equilibrium and how shifts in supply and demand affect equilibrium price and quantity.

Identify and define substitutes and complements and their impact on demand.

Analyze the effects of market and government actions on market equilibrium.

Understand the concept of excess demand (shortage) and excess supply (surplus) in unregulated markets and predict market adjustments.

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Definitions:

Express Trust

A trust created either while the settlor is alive or by will.

Created

Brought into existence; originated or produced something new.

Family Waqf

An endowment made by a Muslim for religious, educational, or charitable purposes, typically for the benefit of family members.

Trust System

A legal arrangement in which trustors entrust their assets to trustees for the benefit of beneficiaries according to the terms specified in the trust agreement.