After the Auditor Has Identified the Key Internal Controls and Weaknesses

question 100

Multiple Choice

After the auditor has identified the key internal controls and weaknesses and assessed control risk,it is appropriate to decide whether

• A)substantive tests will be increased sufficiently to justify the cost of performing tests of controls.
• B)substantive tests will be reduced sufficiently to justify the cost of performing tests of controls.
• C)tests of controls will be increased sufficiently to justify the cost of performing substantive tests.
• D)tests of controls will be reduced sufficiently to justify the cost of performing substantive tests.

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Definitions:

Cash Collection

The process of receiving and processing payments from customers, typically impacting the business’s liquidity.

Unearned Revenues

Income received by an individual or company for a service or product that has yet to be provided or delivered.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of assets, provision of services, or other means.

Net Income

The total earnings of a company after deducting all expenses and taxes from total revenue.