If, When Obtaining an Understanding of Control Activities of a Relatively

question 15

True/False

If, when obtaining an understanding of control activities of a relatively small client, the auditor identified no control activities, the auditor would probably set a high assessment of control risk.

---

Definitions:

Unfavorable

A term often used in budgeting and financial analysis to describe results that are worse than expected or budgeted figures.

Cost Variance

The difference between actual cost and the flexible budget at actual volumes.

Actual Cost

The incurred expenditure on materials, labor, and overhead necessary to produce a product or perform a service, reflecting the genuine expense.

Standard Cost

A pre-determined cost of manufacturing a product or delivering a service, calculated to help manage budgets and performance evaluations.