When Testing Controls, Sampling Risk Is the Risk That the Auditor

question 3

Multiple Choice

When testing controls, sampling risk is the risk that the auditor:

• A) concludes that their client's internal controls are ineffective when they are effective.
• B) concludes that their client's internal controls are effective when they are ineffective.
• C) both a and b
• D) none of the above.

---

Definitions:

Alexander Hamilton

A Founding Father of the United States, first Secretary of the Treasury, and key figure in the establishment of the national financial system.

Marbury v. Madison

The 1803 Supreme Court case that established the principle of judicial review in the United States, allowing courts to strike down laws, statutes, and some government actions that violate the Constitution.

Judicial Review

The principle that allows courts, especially the Supreme Court, to review and possibly invalidate legislation and government actions deemed inconsistent with the constitution.

John Marshall

Was the fourth Chief Justice of the United States (1801–1835), known for his role in establishing the judiciary as a coequal branch of government.