Which of the Following Statements Is Correct Concerning the Understanding

question 62

Multiple Choice

Which of the following statements is correct concerning the understanding of internal control needed by auditors?

• A)The auditors must understand the information system,not the accounting system.
• B)The auditors must understand monitoring and all preliminary accounting controls.
• C)The auditors must have a sufficient understanding to assess the risks of material misstatement.
• D)The auditors must understand the control environment,risk assessment,and all control activities.

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Definitions:

Systematic Correlation

The relationship between the return of an asset and the return of the market as a whole, often used in the context of financial risk.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to measure the volatility of an investment's return.

Risky Stocks

Investments in the stock market that carry a high level of risk, typically due to volatility, lack of predictability, or the potential for substantial loss.

Market

A medium that allows buyers and sellers to exchange goods, services, or information.