After Obtaining an Understanding of Internal Controls and Assessing Control

question 7

Multiple Choice

After obtaining an understanding of internal controls and assessing control risk of an entity, an auditor decided not to perform tests of controls for purposes of the audit. The auditor most likely decided that:

• A)the available evidential matter obtained through tests of controls would not support an increased level of control risk.
• B)a reduction in the assessed level of control risk is justified for certain financial statement assertions.
• C)it would be inefficient to perform tests of controls that would result in a reduction in planned substantive procedures.
• D)the assessed level of inherent risk exceeded the assessed level of control risk.

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Definitions:

Tubular Or Cylindrical

Describes an object having a hollow or solid cylinder shape.

Gage

A device used for measurement or to determine conformity to a set of specifications, often used in manufacturing and engineering to ensure quality and precision.

Extra Material

Additional material provided beyond the specified dimensions to allow for finishing or machining.

Flat Sheet

A type of raw material that comes in flat panels, typically used in manufacturing or construction; it can be cut and shaped into various parts and forms.