The Likelihood of Assessing Control Risk Too High Is the Risk

question 92

Multiple Choice

The likelihood of assessing control risk too high is the risk that the sample selected to test controls

• A) Does not support the auditor's planned level of control risk when the true operating effectiveness of the control justifies such an assessment.
• B) Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transaction classes.
• C) Contains proportionally fewer monetary errors or deviations from prescribed control procedures than exist in the balance or class as a whole.
• D) Does not support the tolerable misstatement for some or all of management's assertions.

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Definitions:

Cash Offer

A proposal to buy assets, including securities or real estate, using cash as the form of payment without involving financing or loans.

Rights Offer

An offer to existing shareholders to buy additional shares in a company at a discount to the market price.

Seasoned New Issue

A seasoned new issue refers to securities offered for sale by a company after the initial public offering, meaning the company already has securities that have been trading in the secondary market.

New Issue

The term for securities that are offered to the public for the first time through an initial public offering (IPO) or a bond issuance.