In Testing Controls Over Invoices, an Auditor Discovers That in 10

question 18

Multiple Choice

In testing controls over invoices, an auditor discovers that in 10% of her statistical sample invoices were sent for full shipments, even if shipping documents suggested partial shipments. In this case, she would likely ________.

• A) increase her sample size to determine the extent of the control weakness
• B) recalculate control risk to determine if there is any effect on the nature, timing, or extent of her year-end procedures
• C) conclude that controls are working at 90% effectiveness and classify control risk as low
• D) consult with her partner to consider launching a fraud investigation

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Definitions:

Social Dilemmas

Situations in which collective interests are at odds with private interests, leading to conflicts between cooperating for the common good or acting in one's own self-interest.

Self-Interest

The consideration of one's own advantage or well-being as the primary motivating factor for actions.

Larger Goal

An overarching ambition or aim that guides a set of smaller objectives or tasks.

Ingroup Bias

The tendency to favor and extend better treatment to members of one's own group over those of other groups.