When an Auditor Increases the Planned Assessed Level of Control

question 19

Multiple Choice

When an auditor increases the planned assessed level of control risk because certain control procedures were determined to be ineffective, the auditor would most likely increase the ________.

• A) extent of tests of details
• B) level of inherent risk
• C) extent of tests of controls
• D) level of detection risk

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Definitions:

Labor Efficiency Variance

The difference between the actual hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly labor rate.

Labor Time

The duration of time workers spend in the process of producing goods or providing services.

Standard Quantity

The expected quantity of materials or labor hours needed to produce a unit of product, set during the budgeting or planning process.

Standard Hours Allowed

The amount of time that should have been taken to complete a task or produce a certain quantity of goods, based on predetermined standards.