If an Auditor Determines That a Client Company's Internal Controls

question 56

Multiple Choice

If an auditor determines that a client company's internal controls are producing reliable and complete financial information, the auditor will rely upon the internal control system and:

• A) reduce the extent of controls testing in the interim phase of the financial statement audit.
• B) reduce the planned substantive testing during the financial statement audit.
• C) increase the amount of evidence collected during the financial statement audit.
• D) increase the planned substantive testing during the financial statement audit.

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Definitions:

TSX Rules

The regulations and guidelines established by the Toronto Stock Exchange (TSX) that govern trading, listing, and company compliance in Canada’s primary stock market.

Dividend Per Share

The amount of dividend paid out per share of stock, indicating the portion of a company's earnings distributed to shareholders.

Excess Cash

Excess cash refers to the amount of cash holdings that exceed the normal operational needs of a business, often considered for investment, debt repayment, or as a reserve against future risks.

Cash Dividend

A payment made by a company to its shareholders, usually in cash, out of its earnings.