When Controls Do Not "Work

question 88

Multiple Choice

When controls do not "work"

• A)the auditor increases the amount of substantive testing
• B)the auditor reduces the amount of substantive testing
• C)the auditor increases the amount of substantive testing over what would have been done if the control had been effective in preventing or detecting misstatements in the financial statements
• D)the auditor decreases the amount of substantive testing over what would have been done if the control had been effective in preventing or detecting misstatements in the financial statements

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Definitions:

French Government

The political system of France, characterized by semi-presidential system with a division of powers between the president, the parliament, and the government.

Salt Monopoly

A situation where a single entity controls the supply and pricing of salt, historically seen as a strategic control over a vital commodity.

Economic Profits

Profits earned by a firm or individual in excess of the opportunity costs of all resources used to generate those profits, representing returns beyond the normal profit level.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and easy entry and exit from the market.