When the Auditor Has Determined That There Is a Significant

question 39

Multiple Choice

When the auditor has determined that there is a significant risk of misstatement for a particular assertion (for example,completeness of revenue) ,what type of audit testing does CAS 330 require?

• A)tests of risk assessment
• B)tests of understanding of internal control
• C)control tests
• D)substantive tests

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Definitions:

Common Stock

An equity security that represents ownership in a corporation, giving shareholders the right to vote on corporate matters and receive dividends.

Stock Transfer Agent

A third-party firm hired by a company to track and manage its stockholders and transactions, including transfers and issuance of stock certificates.

Board of Directors

A group of individuals elected by shareholders to oversee the management and make major decisions for a company.

Retained Earnings

The part of a company's net profit that is retained by the company instead of being paid out to shareholders in the form of dividends.