After Obtaining an Understanding of Internal Controls and Assessing Control

question 84

Multiple Choice

After obtaining an understanding of internal controls and assessing control risk of an entity,an auditor decided not to perform tests of controls for purposes of the audit.The auditor most likely decided that

• A) The available evidential matter obtained through tests of controls would not support an increased level of control risk.
• B) A reduction in the assessed level of control risk is justified for certain financial statement assertions.
• C) It would be inefficient to perform tests of controls that would result in a reduction in planned substantive procedures.
• D) The assessed level of inherent risk exceeded the assessed level of control risk.

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Definitions:

Capacity

The maximum amount that something can contain or produce, or the ability to perform, understand, or absorb something.

Flightless Birds

Birds that have evolved in such a way that they are unable to fly, often having smaller wing bones and a heavier, more robust body structure.

Biogeographical

Pertaining to the distribution of plants and animals in different regions and ecosystems across the world.

Cenozoic Era

The current geological era, beginning 66 million years ago, following the mass extinction of the dinosaurs and characterized by the rise of mammals.