When Using Sampling for Tests of Controls,which of the Following

question 20

Multiple Choice

When using sampling for tests of controls,which of the following audit consequences may follow?

• A)If sample results indicate that the control is operating effectively,but in fact it is not,control risk will be assessed too low.
• B)If sample results indicate that the control is operating effectively,but in fact it is not,control risk will be assessed too high.
• C)If sample results indicate that the control is not operating effectively,but in fact it is operating effectively,the audit is likely to be faulty because of reduced substantive tests.
• D)If sample results indicate that the control is not operating effectively,but in fact it is operating effectively,control risk will be assessed too low.

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Definitions:

Vertical Integration

describes a strategy where a company expands its operations into different stages of production within its industry, often to control the supply chain or reduce dependency on suppliers.

E-Procurement

The electronic procurement process that utilizes online systems and technology to streamline purchasing, reduce costs, and enhance vendor management.

Vendor Selection

The process of evaluating and choosing suppliers based on criteria such as price, quality, reliability, and service.

Final Assembly

The phase in manufacturing where parts or components are assembled to create the finished product.