As Part of Gaining an Initial Understanding of Internal Control

question 25

Multiple Choice

As part of gaining an initial understanding of internal control, an auditor is required to do all of the following except:

• A)consider factors that affect the risk of material misstatement.
• B)ascertain whether internal control policies and procedures have been placed in operation.
• C)identify the types of potential misstatements that can occur.
• D)obtain knowledge about the operating effectiveness of the internal control.

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Definitions:

Inflationary Gap

A situation where the demand for goods and services exceeds the supply, leading to inflation and an overheating economy.

Fiscal Policy

Alterations in expenditure and taxation by the government to control and impact the country's economic conditions.

National Debt

The sum of funds a nation's government has accumulated in debt, often due to spending more than its budget allows.

GDP

Gross Domestic Product represents the overall market value of all end products and services made inside a nation over a certain timeframe.