There Are Three Phases in the Risk Response Category of the Audit

question 47

Multiple Choice

There are three phases in the risk response category of the audit process (design further audit procedures, tests of control, substantive tests) . When will the auditor conduct tests of controls?

• A) when there are poor internal controls
• B) if the auditor plans to rely upon them
• C) when a substantive audit approach is selected
• D) when there are low risks of material error

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Definitions:

Asymmetric Information

A situation in markets where one party in a transaction has more or superior information compared to another.

Independent Agency

An independent agency is a governmental body designed to operate independently of political influence, often responsible for regulating certain aspects of the economy or society.

Safety Risks

Safety risks refer to potential sources of danger or harm that could result in injury or health hazards in various environments, including workplaces, homes, and public spaces.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a market balance.