An Increase in the Effectiveness of Internal Controls Would Have

question 66

Multiple Choice

An increase in the effectiveness of internal controls would have the greatest effect on

• A) reducing control risk.
• B) reducing detection risk.
• C) reducing inherent risk.
• D) reducing audit risk.

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Definitions:

Trend Analysis

A comparison of a single firm’s present performance with its own past performance, preferably for more than two years.

Financial Ratios

Quantitative measures derived from financial statements used to evaluate a company's financial performance, health, and risks.

Previous Years

Referring to the years before the current one, often used in contexts of analysis, comparison, or financial performance evaluation.

Pro Forma Financial Statements

Forward-looking financial documents that project a business’s future financial performance based on certain assumptions.