Auditors Have Several Techniques Available to Them to Test Computer-Processing

question 7

Multiple Choice

Auditors have several techniques available to them to test computer-processing controls.An audit technique that immediately alerts auditors of suspicious transactions is known as

• A) a SCARF.
• B) an audit hook.
• C) an audit sinker.
• D) the snapshot technique.

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Definitions:

AAA Credit Rating

The highest credit rating assigned to a borrower's debt instruments by credit rating agencies, indicating an extremely low risk of default.

A Credit Rating

This is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting.

Note

Unsecured debt, usually with a maturity under 10 years.

Protective Covenant

A clause in a financial contract that restricts certain actions of the borrower to protect the lender's interests.