In Which of the Following Situations Would an Auditor Most

question 40

Multiple Choice

In which of the following situations would an auditor most likely use a strategy of reliance on internal control?

• A)The systems analyst reviews output and controls the distribution of output from the IT department.
• B)The entity has been slow to update its IT system to reflect changes in billing practices.
• C)No paper trail is generated, as the entity receives sales orders, bills customers and receives payment based only on information generated from IT.
• D)The auditor has been unable to determine whether all changes to a client's IT were properly authorised.

---

Definitions:

New Bonds

Recently issued debt securities by governments, municipalities, or corporations to finance their operations.

New Stock

Shares that are issued for the first time to the public by a company seeking to raise capital.

Indirect Method

A technique used in financial reporting to convert net income into net cash flow from operating activities, by adjusting for non-cash transactions.

Investment Bankers

Financial professionals who assist corporations and governments in raising capital by underwriting and issuing securities and advising on mergers and acquisitions.