In Performing the Audit of Internal Control Over Financial Reporting

question 11

Multiple Choice

In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class 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.

---

Definitions:

Farming Business

An enterprise engaged in the cultivation of crops and/or the raising of animals for the purpose of producing food, fiber, and other agricultural products.

Chapter 12

A bankruptcy provision designed for "family farmers" or "family fishermen" to devise a plan to repay all or part of their debts.

Financial Year

A period used for calculating annual financial statements in businesses and other organizations, often stretching over a 12-month period but not necessarily aligning with the calendar year.

Chapter 13 Provisions

Regulations under Chapter 13 of the U.S. Bankruptcy Code allowing individuals with a regular income to create a plan to repay all or part of their debts.