The Auditor Should Consider Which of the Following Factors in Selecting

question 96

Multiple Choice

The auditor should consider which of the following factors in selecting the correct sample size?

• A)More testing will be required for manual controls than automated controls because manual controls are more prone to human error.IT controls that have been tested should continue to be reliable.
• B)The more transactions in a system,the more items need to be tested.
• C)The more assurance we receive from other audit procedures,the less the control is tested.
• D)The less susceptible the control is to management override,the more the control is tested.
• E)The more frequently a control is performed,the less items are tested.More internal control tests are performed for controls that are performed monthly than for controls performed daily.
• F)both A and C
• G)both B and D
• H)both C and E

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Definitions:

Net Present Value

A valuation method used to determine the attractiveness of an investment opportunity, calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.

Discounted Payback

is a capital budgeting method that calculates the period of time required for the discounted cash flows from a project to recoup its initial cost.

Wholesale Book Outlet

A distributor that sells books in large quantities at discounted prices, primarily to retailers, libraries, and educational institutions.