If the Auditor Decides to Assess Control Risk at the Moderate

question 139

Multiple Choice

If the auditor decides to assess control risk at the moderate level in a private company audit, when in previous years the auditor set control risk at the maximum level, then tests of controls for the current year would be

• A) increased in number.
• B) reduced in number.
• C) not performed.
• D) unchanged from prior planned settings.

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Definitions:

Financial Advantage

The benefit or profit derived from financial actions or decisions, such as investments or loans.

Dropping Product

A decision made by a company to stop producing or selling a particular product due to factors like low sales, reduced profit margins, or strategic realignment.

Fixed Manufacturing Expenses

represent the costs that do not vary with the level of production output, such as rent, salaries of permanent staff, and depreciation of factory equipment.

Financial Advantage

A benefit in monetary terms that gives an individual, company, or situation a superior position compared to others.