An Audit Strategy Will Include Increased Reliance on Tests of Controls

question 46

Multiple Choice

An audit strategy will include increased reliance on tests of controls when

• A) inherent risk and control are high.
• B) inherent risk and control risk are low.
• C) the auditor believes there is a high risk that their client's internal controls will not prevent or detect material misstatements.
• D) there is a high susceptibility of assertions to material misstatements.

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Definitions:

World-Class Capabilities

Exceptional skills, methods, and processes that enable an organization to perform at the highest international standards.

Outsourcing Concerns

Issues or considerations related to the practice of transferring business processes or services to external providers, including quality, security, and dependency risks.

Supplier's Risks

Potential challenges or threats that suppliers face, including financial instability, production issues, or market demand changes.

Layoffs

The act of temporarily or permanently dismissing employees from their jobs, often due to economic downturns or organizational restructuring.