In Performing the Audit of Internal Control Over Financial Reporting

question 17

Multiple Choice

In performing the audit of internal control over financial reporting, the auditor emphasizes internal control over classes of transactions because

• A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing.
• B) the class of transaction is where most fraud schemes occur.
• C) account balances are less important to the auditor then the changes in the account balances.
• D) classes of transactions tests are the most efficient manner to compensate for inherent risk.

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Definitions:

Agony of the Moment

An intense, often fleeting emotional response to a particularly stressful or traumatic experience.

Act of God

An unforeseeable natural event, such as an earthquake, flood, or tornado, that cannot be prevented and is excluded from legal liability.

Libel

Defamation in some permanent form, such as in writing, a cartoon, etc.

Defence to Negligence

Legal reasons provided by a defendant in a lawsuit to prove they were not negligent or to mitigate their level of responsibility for an incident.