In Obtaining an Understanding of an Entity's Internal Control in a Financial

question 88

Multiple Choice

In obtaining an understanding of an entity's internal control in a financial statement audit of a nonpublic company,an auditor is not obligated to

• A) Determine whether the control activities have been placed in operation.
• B) Perform procedures to understand the design of the internal control policies.
• C) Document the understanding of the entity's internal control components.
• D) Search for significant deficiencies in the operation of the internal control.

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Definitions:

Status Differentials

The varying levels of prestige, respect, and authority among roles or positions within a group or organization, which can affect interactions and organizational dynamics.

Causes of Problems

The underlying factors or reasons that lead to issues or difficulties within an organization or any other context.

Cycle of Competitive Conflict

Cycle of competitive conflict refers to the dynamic and ongoing process of actions and reactions between competitors in a market, affecting strategies and outcomes.

Mistrust

The lack of trust or confidence in someone or something, often resulting from negative past experiences or perceptions of unreliability.