During Consideration of Internal Control in a Financial Statement Audit

question 14

Multiple Choice

During consideration of internal control in a financial statement audit of a nonpublic company,an auditor is not obligated to

• A) Search for significant deficiencies in the operation of internal control.
• B) Understand the internal control environment and the information system.
• C) Determine whether the controls relevant to audit planning have been placed in operation.
• D) Perform procedures to understand the design of internal control.

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Definitions:

Straight-Line Method

A depreciation technique in which an asset's cost is evenly reduced over its useful life, assuming constant use and value decline.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debt obligations over a period.

Par Value

The stated value of a financial instrument such as a bond or stock share, as declared by the issuer.

Market Rate

The current price or cost of a good, service, or financial instrument in the marketplace.