Auditors Perform Test of Controls and Substantive Tests of Transactions

question 61

Multiple Choice

Auditors perform test of controls and substantive tests of transactions for several reasons. Which of the following is not one of those reasons?

• A) for larger public company audits, to conclude the control is operating effectively
• B) to reduce assessed control risk and thereby reduce tests of details of balances
• C) to determine whether the exception rate in the population is sufficiently low
• D) to use rate of occurrence tests in the tests of details of balances

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Definitions:

Efficient Outcome

A situation where resources are allocated in the most effective manner, maximizing benefits and minimizing waste.

Lawsuit

A legal action brought in a court by a plaintiff against a defendant, typically seeking compensation for some form of harm or enforcement of a right.

Common Property Resource

Resource to which anyone has free access.

Efficient Use

Utilization of resources in such a way that maximizes the production of goods and services at lowest cost.