When Control Risk Is High, the Audit Strategy Is to

question 45

Multiple Choice

When control risk is high, the audit strategy is to

• A) do little or no tests of controls and increase reliance on substantive testing of transactions and account balances.
• B) assume the client's management is dishonest and immediately report them to the Canada Revenue Agency (CRA).
• C) increase reliance on tests of controls and reduce reliance on substantive testing of transactions and account balances.
• D) refuse to continue with the remainder of the audit due to the high risk of fraud.

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Definitions:

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Fiscal Policy

A government's use of spending and taxation to influence the economy.

Money Supply

The total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.

National Debt

describes the total amount of money that a country's government has borrowed and not yet repaid.