An Audit Strategy Will Include Increased Reliance on Tests of Controls

question 46

Multiple Choice

An audit strategy will include increased reliance on tests of controls when

• A) inherent risk and control are high.
• B) inherent risk and control risk are low.
• C) the auditor believes there is a high risk that their client's internal controls will not prevent or detect material misstatements.
• D) there is a high susceptibility of assertions to material misstatements.

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Definitions:

Per Unit

A measurement specific to one unit of a good or service, indicating cost, price, or quantity related to a single unit.

Output

The total amount of goods or services produced by a company or country.

Input

Resources used in the production process, including labor, raw materials, and capital.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production, such as labor.