For Financial Statement Audits, Auditors Need to Understand Controls That

question 29

Multiple Choice

For financial statement audits, auditors need to understand controls that are relevant to the audit in order to

• A) identify and assess the risks of material misstatements.
• B) perform preliminary analytical procedures.
• C) detect fraud.
• D) assess inherent risk.

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Definitions:

Functional

Pertaining to the purposeful and practical use or action of something, often implying that it is designed based on its utility.

Cognitive

Pertaining to mental processes such as perception, memory, judgment, and reasoning.

Biological

refers to the processes and phenomena inherent to living organisms, encompassing their physical structure, biochemical processes, growth, and development.

Moral Standards

Moral Standards are principles of right and wrong behavior and the goodness or badness of human character.