Based on a Study and Evaluation Completed at an Interim

question 56

Multiple Choice

Based on a study and evaluation completed at an interim date, the auditor concludes that no significant internal control weaknesses exist. The records and procedures would most likely be tested again at year-end if:

• A)compliance tests were not performed by the internal audit staff during the remaining period.
• B)the internal control system provides a basis for reliance in reducing the extent of substantive procedures.
• C)the auditor used nonstatistical sampling during interim compliance testing.
• D)inquiries and observations lead the auditor to believe that conditions within the internal control system have changed.

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Definitions:

Agreement On Price

A mutual understanding or contract between parties regarding the cost of goods or services.

Contract

An accord between two or more entities that carries legal obligations and is enforceable.

Substantive Unconscionability

A principle in contract law that allows courts to refuse to enforce a contract or clause deemed to be so unfair or unjust towards a party that it is oppressive.

Mirror Image Rule

A principle in contract law stating that an offer must be accepted exactly without modifications; any changes negate the original offer and create a counteroffer.