An Auditor May Decide to Assess Control Risk at High

question 44

Multiple Choice

An auditor may decide to assess control risk at high for certain assertions because the auditor believes:

• A)evaluating the effectiveness of control policies and procedures is inefficient.
• B)sufficient evidential matter to support the assertions is likely to be available.
• C)considering the relationship of assertions to specific account balances is more efficient.
• D)more emphasis on tests of controls than substantive tests is warranted.

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Definitions:

Motor Vehicle

A self-propelled vehicle used for transportation of people or goods on the ground, such as cars, trucks, buses, and motorcycles.

Spare Parts Store

A business or location that specializes in selling replacement parts and components for machinery, vehicles, or other equipment.

Underapplied Overhead

Refers to the situation when the actual factory overhead costs are more than the overhead costs applied to a product based on the predetermined rate.

Overapplied Overhead

A situation where the estimated manufacturing overhead cost is more than the actual overhead incurred during a period.