Auditors Will Need to Perform More Substantive Tests Than Normal

question 15

Multiple Choice

Auditors will need to perform more substantive tests than normal to obtain sufficient appropriate evidence that a financial instrument is fairly stated if which of the following conditions exist?

• A)Management is objective and transparent in their assumptions.
• B)Management's key assumptions are subject to volatility.
• C)The entity's portfolio is composed of only stocks issued by Fortune 100 firms traded in an active market.
• D)The entity does not have control weaknesses in its valuation processes.

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Definitions:

Remedy

A means of legal reparation or correction provided to a party who has suffered a loss or injury.

Commercial Reasonableness

The standard by which business actions are judged, based on what a reasonable person would consider fair and appropriate under the circumstances.

Consequential Damages

Refers to the secondary effects or financial losses that occur as a result of a breach of contract, beyond the immediate scope of the agreement.

Substitute Goods

Products or services that can serve as replacements for one another, satisfying the same consumer need.