When Performing an Audit of Internal Control Under PCAOB Requirements

question 50

Multiple Choice

When performing an audit of internal control under PCAOB requirements, auditors evaluate control: $$\begin{array} { | l | c | c | } \hline & \text { Design Effectiveness } & \text { Operating Effectiveness } \\\hline \text { A. } & \text { Yes } & \text { Yes } \\\hline \text { B. } & \text { Yes } & \text { No } \\\hline \text { C. } & \text { No } & \text { Yes } \\\hline \text { D. } & \text { No } & \text { No } \\\hline\end{array}$$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

---

Definitions:

Contract Rate

The agreed upon interest rate specified in the terms of a contract, often relating to loans or bonds.

Effective Rate

The effective rate, often referred to as the annual equivalent rate, measures the real return on savings or the real cost of a loan, taking into account the effect of compounding interest.

Semiannual Interest

Interest calculated or paid twice a year, often related to bond or loan agreements.

Straight-Line Method

A method of calculating depreciation of an asset where the expense is uniformly spread over its useful life.