When Completing the Audit of Internal Controls for an Issuer,the

question 47

Multiple Choice

When completing the audit of internal controls for an issuer,the severity of an internal control deficiency depends on:

• A) Whether there is a reasonable possibility that the company's controls will fail to prevent or detect a misstatement of an account balance or disclosure.
• B) Whether the account has a history of errors.
• C) The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.
• D) Both A and C are correct.
• E) All of the above are correct.

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Definitions:

Empirical

Based on observations or experiences rather than theory or pure logic, often involving the collection and analysis of data.

Bystander Effect

A social psychological phenomenon where individuals are less likely to offer help to a victim when other people are present.

Needed Help

Requires assistance or support, possibly due to facing difficulties or being unable to resolve an issue independently.

Group Cohesiveness

The extent to which members of a group remain together and are united in the pursuit of common goals.