If the Auditor Decides That the Internal Controls Are Not

question 41

Multiple Choice

If the auditor decides that the internal controls are not designed appropriately then:

• A) the auditor tests those controls in-depth.
• B) the auditor performs tests of internal control for those transactions and accounts deemed risky.
• C) the auditor performs substantive procedures.
• D) All of the above.

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Definitions:

LAC Curve

Long-Run Average Cost curve, a graphical representation showing the minimum average cost of production at different levels of output when input prices and technology remain constant.

Constant-Cost Industry

A constant-cost industry is an industry where the costs of production, including inputs, do not change as the industry's output changes.

Demand Shift

Occurs when the entire demand curve moves due to changes in factors other than the price of the good, such as consumer preferences or income.

Supply Increase

A situation where the quantity of a good or service that is available to consumers rises.