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:

Self-confidence

The belief in one's own abilities and judgment, which fosters a sense of trust and confidence in oneself across various situations.

Stimulants

Substances that increase the activity of the nervous system, resulting in increased alertness, attention, and energy.

Methamphetamine

A powerfully addictive drug that stimulates the central nervous system, with accelerated body functions and associated energy and mood changes; over time, appears to reduce baseline dopamine levels.

Euphoria

A feeling or state of intense excitement and happiness, often beyond what is considered normal.