After Obtaining an Understanding of the Entity's Internal Control and Assessing

question 103

Multiple Choice

After obtaining an understanding of the entity's internal control and assessing control risk,an auditor of a nonpublic company decided not to perform additional tests of controls.The auditor most likely concluded that the

• A) Additional evidence to support an additional reduction in control risk was not cost beneficial.
• B) Assessed level of inherent risk exceeded the assessed level of control risk.
• C) Internal control structure was properly designed and justifiably may be relied on.
• D) Evidence obtainable through tests of controls would not support an increased level of control risk.

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Definitions:

Budget Deficit

The situation where a government's expenditures exceed its revenues over a specific period of time, leading to a need for borrowing or spending cuts.

Budget Surplus

The situation in which a government's revenues exceed its expenditures during a given period, indicating financial health.

Public Saving

The portion of national saving that is accumulated by the government sector, often reflected as the difference between government revenues and expenditures.

National Saving

The total amount of savings generated within a country, which is the sum of private savings by households and businesses plus public savings from the government’s budget.