The Concept of Reasonable Assurance in the Context of an Entity's

question 10

Multiple Choice

The concept of reasonable assurance in the context of an entity's internal controls recognizes that

• A) Auditors may fail to detect material misstatements.
• B) Proper internal controls guarantee that material misstatements will not occur.
• C) Proper internal controls preclude fraud.
• D) The costs of some controls may be too high to implement in relation to potential benefits.

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Definitions:

Validity

How well a psychometric test measures what it is intended to measure.

Reliability

How consistently a psychometric test produces similar results each time it is used.

Stereotype Threat

Apprehension about confirming negative stereotypes related to a person’s own group.

Nonvaluative

Pertaining to an approach or judgment that does not involve ascribing value, worth, or merit.