The Audit Strategy for a Client with High Inherent Risk

question 36

Multiple Choice

The audit strategy for a client with high inherent risk and high control risk will include:

• A)Decreased reliance on substantive tests.
• B)No or very limited tests of controls.
• C)Increased testing of controls.
• D)Increased reliance on controls.

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Definitions:

Government Budget Deficit

The financial situation that occurs when a government's expenditures exceed its revenues.

Demand for Funds

The desire of businesses, governments, and individuals to borrow money to fund investment projects, operations, or consumption.

Interest Rate

The cost of borrowing money or the return on investment for lenders, typically expressed as a percentage.

Stock Price Index

An index that measures the performance of a basket of stocks, representing a specific sector, market, or economy.