An Auditor Should Recognize That the Application of Auditing Procedures

question 150

Multiple Choice

An auditor should recognize that the application of auditing procedures may produce evidence indicating the possibility of errors of fraud and therefore should

• A) plan and perform the engagement with an attitude of professional skepticism.
• B) not rely on internal controls that are designed to prevent or detect errors or fraud.
• C) design audit tests to detect unrecorded transactions.
• D) extend the work to audit the majority of the recorded transactions and records of an entity.

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Definitions:

Payoff Table

A table that summarizes the outcomes of different decisions, representing the payoffs or losses for each possible scenario.

State of Nature

A term in decision theory representing all possible states or outcomes in a decision-making problem, which are not under the control of the decision maker.

Payoff Table

A tabular representation of the outcomes for each combination of strategies in decision theory, typically used in strategic decision making and game theory.

States of Nature

Hypothetical conditions that could affect the outcome of a decision or experiment but are beyond the control of the decision-maker.