After Obtaining an Understanding of Internal Control and Assessing Control

question 30

Multiple Choice

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

• A)a combination of limited tests of controls with analytical procedures would be more efficient and effective than detailed substantive testing.
• B)the assessed level of detection risk exceeded the assessed level of control risk.
• C)control risk should be assessed as low for key financial report assertions.
• D)the evidence that could be obtained through tests of controls would not support an assessment of control risk as less than high.

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Definitions:

Scientific Method

The scientific method is a systematic process for conducting research and experimentation, involving observation, hypothesis formulation, experimentation, and conclusion to test scientific theories.

Reporting Findings

The process of presenting the results of a study or investigation to stakeholders or the public through various formats.

Archival Research

A method of research involving the study of historical documents and records to gather data and test hypotheses.

Meta-Analysis

A statistical technique for combining the findings from independent studies to determine the overall trend of data.