If an Auditor Believes That the Audit Client's Internal Controls

question 73

Multiple Choice

If an auditor believes that the audit client's internal controls are effective, the approach she/he would take in the conduct of the audit is

• A) to place emphasis on testing account balances.
• B) to place her/his focus on tests of controls and further tests of transactions and balances.
• C) a substantive approach.
• D) none of the above

Evaluate and compute total overhead variances.

Understand and calculate sales price and volume variances.

Analyze direct materials variances including price and quantity variances.

Understand the principle behind standard costing in management accounting.

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Definitions:

Donee Beneficiary

In contract law, a person who benefits from the execution of a contract, though not one of the principle parties involved.

Incidental Beneficiary

A third party who benefits from a contract indirectly or unintentionally, without being a direct party to the agreement.

Delegatee

An individual or party to whom duties or authority are delegated by another, known as the delegator.

Delegator

A person or entity that assigns tasks, duties, or responsibilities to another, typically within an organizational or managerial context.