When Obtaining an Understanding of the Entity and Its Environment,the

question 7

Multiple Choice

When obtaining an understanding of the entity and its environment,the auditor should obtain an understanding of internal controls primarily to

• A) Identify areas of relatively high risk of misstatement and plan the audit accordingly.
• B) Provide suggestions for improvement to the company.
• C) Serve as a basis for setting audit risk and materiality.
• D) Decide whether to perform an audit for the company.

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Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or goal.

Authentic Leaders

Leaders who are self-aware, genuine, and transparent, inspiring trust by being true to themselves and their values.

Trusting Relationships

involve interactions characterized by confidence, reliance, and belief in the integrity, character, and ability of another person or entity.

Self-Gain

The pursuit of personal benefit or advantage, often without regard for others.