After Obtaining an Understanding of the Internal Control System and Assessing

question 24

Multiple Choice

After obtaining an understanding of the internal control system and assessing control risk,an auditor decided not to perform additional tests of controls.The auditor most likely concluded that ________.

• A)the additional evidence to support a further reduction in control risk was not cost-beneficial
• B)the assessed level of inherent risk exceeded the assessed level of control risk
• C)the internal control system was properly designed and justifiably may be relied on
• D)the evidence obtainable through tests of controls would not support an increased level of control risk

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Definitions:

Instinct Theory

A view that explains human behavior as motivated by automatic, involuntary, and unlearned responses.

Homeostasis

The ability of a living organism to regulate its internal environment to maintain a stable, constant condition despite external changes.

Drive-Reduction Theory

The idea that a physiological need creates an aroused tension state (a drive) that motivates an organism to satisfy the need.

Maintain Homeostasis

The process by which living organisms regulate their internal environment to stabilize health and functioning, despite external changes.