An Example of an Audit Procedure That Relates to the Auditor's

question 13

Multiple Choice

An example of an audit procedure that relates to the auditor's understanding of internal control is to

• A)count petty cash at all locations.
• B)use test data to verify functioning of data entry controls.
• C)observe entity activities and operations.
• D)trace all large fixed-asset purchases to supporting invoices.

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Definitions:

Monte Carlo Simulation

A computational technique that uses random sampling to approximate the probability of various outcomes in a process.

Random Values

Numbers or outcomes generated in a manner that follows no discernible pattern, often used in simulations or statistical sampling.

Uncertain Inputs

Factors or variables in a model or process that have unknown or unpredictable values, affecting outcomes and decision-making.

Monte Carlo Sampling

A statistical technique that utilizes random sampling and probability to solve problems that might be deterministic in principle.