An Auditor Has Gained a Detailed Understanding of the Client's

question 14

Multiple Choice

An auditor has gained a detailed understanding of the client's system of internal controls and has conducted extensive tests of those controls. She later assesses control risk as low.
What is she planning to perform?

• A) a combined audit strategy
• B) an audit of financial controls
• C) a substantive audit strategy
• D) a modified audit strategy

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Definitions:

Sales Revenues

Sales revenues refer to the income generated from the sale of goods or services by a company before any expenses are subtracted, indicating the primary source of business income.

Operating Expenses

Costs related to the day-to-day functions of a business, excluding cost of goods sold, but including items like rent, salaries, utilities, and depreciation.

Accrued Liabilities

Accrued liabilities refer to expenses that have been incurred but not yet paid for, recognized on the balance sheet.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.