After Completing the Preliminary Phase of the Review of Internal

question 26

Multiple Choice

After completing the preliminary phase of the review of internal control,the auditor decides not to rely on the system to restrict substantive procedures.Documentation may be limited to the auditor's

• A) Understanding of the internal control.
• B) Reasons for deciding not to extend the review.
• C) Basis for concluding that errors and fraud will be prevented.
• D) Completed internal control questionnaire.

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Definitions:

Maturity

The point in time when a financial instrument or obligation, such as a bond or loan, becomes due and payment is required.

Premium

The amount paid for an insurance policy, or the extra cost above the nominal value of something such as a bond or stock.

Adjunct Liability

A liability that is attached to an asset in a supporting role, increasing the amount recorded as the asset rather than being recognized separately.

Carrying Value

The Carrying Value, or book value, is an accounting measure that represents the value of an asset in a company's balance sheet, minus depreciation or amortization.