Auditors Follow a Four-Step Approach to Reduce Assessed Control Risk

question 23

Multiple Choice

Auditors follow a four-step approach to reduce assessed control risk. Which of the following is not one of the four?

• A) Apply transaction-related audit objectives to a class of transactions.
• B) Identify accounts that have high inherent risk.
• C) Identify key controls that reduce control risk.
• D) For potential misstatements, design appropriate substantive tests of transactions.

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Definitions:

Propensity

An inclination or natural tendency to behave in a particular way.

Terminated By Operation

Describes a condition or method by which something concludes automatically due to the existence of certain predetermined conditions.

Real Estate Broker

A real estate broker is a licensed professional who arranges real estate transactions by matching buyers and sellers, typically earning a commission for their services.

Undisclosed Principal

A person or entity that remains unknown to the third party in a contractual agreement, usually represented by an agent.