The Likelihood of Assessing Control Risk Too High Is the Risk

question 29

Multiple Choice

The likelihood of assessing control risk too high is the risk that the sample selected to test controls:

• A)does not support the auditor's planned assessed level of control risk when the true operating effectiveness of internal control justifies such an assessment.
• B)contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transactions classes.
• C)contains proportionately fewer deviations from prescribed internal controls than exist in the balance or class as a whole.
• D)does not support the tolerable misstatement for some or all of management's assertions.

---

Definitions:

Distribution Transformer

A transformer used in electrical power distribution to step down voltage levels from high to lower levels for consumer use.

Control Transformer

A transformer used to provide a stable voltage supply to control devices in electrical circuits, isolating them from the main power circuit.

Inrush Current

The amount of current that is drawn when an inductive device is first connected to the power line.

Magnetizing

Refers to the process of inducing magnetic properties in a material, usually by placing it within a magnetic field or by passing an electric current through it.