The Risk of Underreliance Is the Probability That the Evidence

question 33

Multiple Choice

The risk of underreliance is the probability that the evidence in the sample indicates:

• A)Low control risk when the actual operating effectiveness of the control does not justify a low control risk assessment.
• B)Low control risk when the actual operating effectiveness of the control justifies a low control risk assessment.
• C)High control risk when the actual operating effectiveness of the control would justify a lower control risk assessment.
• D)High control risk when the actual operating effectiveness of the control would justify a higher control risk assessment.

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Definitions:

Internal Control

Internal control comprises the procedures and processes implemented by a business to safeguard assets, enhance the reliability of accounting records, and promote efficiency.

Authority

The power or right given to an individual or body to make decisions, issue commands, and enforce obedience within a specific scope or area.

Physical Controls

Security measures that are implemented to protect assets, including locks, surveillance cameras, and alarm systems.

Safeguard Assets

Measures or strategies implemented by a company to protect its assets from theft, damage, or misuse.