In the Context of an Audit of Internal Controls,the Auditor

question 34

Multiple Choice

In the context of an audit of internal controls,the auditor must document all of the following except:

• A) The extent to which he or she relied upon work performed by others.
• B) The auditor's understanding and evaluation of the design of each of the components of the entity's internal control over financial reporting.
• C) Transcripts of the auditor's discussion with management concerning the points at which misstatements could occur.
• D) The evaluation of any deficiencies discovered that could result in a modification of the auditor's report.

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Definitions:

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed by the buyer under specified circumstances, like returns or discounts.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the books for the next period.

Owner's Drawings

The amount of money taken from the business by the owner for personal use, not considered a business expense.

Sales Revenue

A company's total income from product sales or service charges prior to the deduction of any operational expenses.