In Performing the Audit of Internal Control Over Financial Reporting

question 17

Multiple Choice

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

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Definitions:

Intersection

The point or set of points where two or more mathematical sets or geometrical shapes meet or overlap.

Union of Events

A set operation that combines all the outcomes of two or more events, with no duplicate outcomes.

Occurs

Happens or takes place in a particular situation or context.

Disjoint Events

Two events that cannot happen at the same time, meaning they have no outcomes in common.