After Completing Tests of Key Controls,the Auditor Should Review the Results

question 15

Multiple Choice

After completing tests of key controls,the auditor should review the results and consider whether

• A)the planned degree of reliance on internal controls is justified.
• B)the audit evidence obtained from the study of internal controls can provide a reasonable basis for an opinion.
• C)further study of internal controls is likely to justify any restriction of tests of details of balances.
• D)sufficient knowledge has been obtained about the entity's entire internal control structure.

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Definitions:

Commercial Refrigerators

Cooling appliances designed for commercial use to store perishable goods at required temperatures to prevent spoilage.

Variable Factory Overhead

Indirect manufacturing costs that vary with the level of production, such as utilities or materials used in the production process.

Direct Labor-Hours

The total hours worked directly on the production or manufacturing of goods, often used to allocate manufacturing overhead.

Denominator Activity

The level of activity used to compute the predetermined overhead rate.