An Entity's Internal Controls Are Most Relevant to the Auditor

question 79

Multiple Choice

An entity's internal controls are most relevant to the auditor when the policies and procedures:

• A)affect the financial statement assertions.
• B)relate to management's planning decisions.
• C)address management's operating decisions.
• D)reflect management's philosophy and operating style.

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Definitions:

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing the U.S. central banking system.

Government Securities

Financial instruments issued by a government to raise funds from the public, including bonds and treasury bills, with a promise to pay back with interest.

Securities

Assets that denote a share in the equity of a corporation available on the public market (stock), a lending agreement with a government or corporate body (bond), or ownership claims evidenced by an option.

New York Federal Reserve Bank

One of the 12 regional Reserve Banks in the Federal Reserve System, playing a key role in monetary policy, financial supervision, and the payment system.