If an Auditor Decides That a Client Has Internal Controls

question 31

Multiple Choice

If an auditor decides that a client has internal controls that can reduce the likelihood of a material misstatement for an identified risk, the auditor will:

• A) test those controls.
• B) qualify the audit report.
• C) adopt a predominantly substantive approach.
• D) not test those controls.

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Definitions:

Equilibrium Rate

The price or level at which supply and demand in a particular market are equal.

Usury Law

Legislation designed to regulate interest rates by setting a maximum rate that can be charged on loans and credit.

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount loaned, which lenders charge borrowers or the rate earned by depositors.

Usury Laws

Legislation that sets maximum interest rates that can be charged on loans.