To Obtain an Understanding of an Entity's Control Environment, an Auditor

question 69

Multiple Choice

To obtain an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because

• A) management may establish appropriate policies and procedures but not act on them.
• B) the board of directors may not be aware of management's attitude toward the control environment.
• C) the auditor may believe that the policies and procedures are inappropriate for that particular entity.
• D) the policies and procedures may be so weak that no reliance is contemplated by the auditor.

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Definitions:

Positive Feedback

A process in which a system amplifies its own output or activity, leading to an increase in the production of that output.

Oxytocin

A hormone and neurotransmitter involved in childbirth and lactation, also contributing to behaviors such as social bonding and trust.

Contractions

The process of muscle fibers shortening and generating force, typically leading to the movement of the body or of materials within the body.

Anterior

Referring to the front or forward part of an organism or one of its structures.