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:

Paid Absences

Compensation provided to employees for days not worked, such as holidays, vacations, or sick days.

Expense Account

An account that records the costs incurred by a company in the process of earning revenue.

Payable Account

An accounting record that shows the total amount of money owed to creditors for goods, services, or loans provided.

Employee Health Insurance

An insurance coverage that provides benefit payments for healthcare services to employees, often paid for wholly or in part by employers.