The Auditor Faces a Risk That the Audit Will Not

question 51

Multiple Choice

The auditor faces a risk that the audit will not detect material misstatements that occur in the accounting process.In regard to minimising this risk, the auditor primarily relies on:

• A)substantive tests.
• B)tests of controls.
• C)internal control.
• D)statistical analysis.

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Definitions:

Ineffective Encoding

The failure to store relevant or necessary information in memory due to insufficient attention or misunderstanding.

Motivated Forgetting

A theoretical concept suggesting that people may forget unwanted information, either consciously or unconsciously, as a defense mechanism.

Time Decay

The reduction in value of an option or other derivative as the expiration date approaches.

Retroactive Interference

A phenomenon where newly learned information interferes with the recall of previously learned information.