When Obtaining an Understanding of an Entity's Internal Control in a Financial

question 19

Multiple Choice

When obtaining an understanding of an entity's internal control in a financial statement audit of a nonpublic company,an auditor is not obligated to

• A) Determine whether control activities have been placed in operation.
• B) Perform procedures to understand the design of the internal control system.
• C) Document the understanding of the company's internal control system.
• D) Search for significant deficiencies in the operation of the internal control system.

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Definitions:

Shield Volcano

A broad, domed volcano with gently sloping sides, built by the eruption of fluid basaltic lava.

Fissure

A long, narrow opening or crack, especially one in the ground or in rock formations.

Eruption Column

A rising column of hot gases, tephra, and rock fragments that erupts high into the atmosphere.

Pyroclastic Flow

A fast-moving cloud of hot volcanic gases, ash, pumice, and rock fragments that generally travel down the flanks of a volcano; synonym: ash flow.