One of the Auditor's Primary Concerns with Regard to Internal

question 40

Multiple Choice

One of the auditor's primary concerns with regard to internal controls is ________.

• A) the degree to which the internal controls are working as designed
• B) the possibility of an inherent risk that has to be controlled
• C) the impact the controls have on the accuracy of the accounting records
• D) the amount of substantive work to be saved by testing controls instead

---

Definitions:

Financial Analysis

The evaluation of a company's financial statements and other financial information to assess its performance, stability, profitability, and liquidity.

Sensitivity Analysis

A technique used to determine how different values of an independent variable impact a particular dependent variable under a given set of assumptions.

Variance Analysis

The process of examining differences between planned financial outcomes and actual financial performance.

Ratio Analysis

A quantitative analysis of information contained in a company's financial statements, used to evaluate performance, liquidity, profitability, and solvency.