After Obtaining an Understanding of an Entity's Internal Control System

question 52

Multiple Choice

After obtaining an understanding of an entity's internal control system, an auditor may assess control risk at the maximum level for some account balances because he or she:

• A) identifies internal controls that are likely to prevent material misstatements.
• B) performs tests of controls to reduce detection risk to an acceptable level.
• C) determines that the pertinent internal control components are not well documented.
• D) believes the internal controls are unlikely to be operating effectively.

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Definitions:

Really Listen

The act of fully concentrating, understanding, responding, and remembering what is being said in a conversation.

Understand Their View

The act of empathetically recognizing and considering someone else's perspective or opinion.

Example of Preaching

An example of preaching typically involves delivering a sermon or moralistic lecture, often within a religious context, aimed at instructing or guiding others in moral or spiritual matters.

Urgent Items

Tasks or matters that require immediate attention or action due to their importance or time sensitivity.