Explain the Relationship Between Internal Controls and Substantive Testing

question 98

Essay

Explain the relationship between internal controls and substantive testing.

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Definitions:

Open Market Operations

are actions taken by central banks to buy or sell government securities in the open market to control the money supply and influence interest rates.

Federal Reserve Notes

The paper currency issued by the Federal Reserve System in the United States, serving as the nation's primary form of legal tender.

Checkable Deposits

Bank account balances that are readily available for withdrawal and can be used for making payments, such as in checking accounts.

U.S. Treasury Deposits

Funds held at the Federal Reserve that belong to the U.S. Treasury, often from revenues or borrowing, used for government spending.