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:

Moral Development

The growth in an individual's understanding of the principles of right and wrong, influenced by cultural, social, and personal factors.

Whistle-Blowing

The act of exposing any kind of information or activity that is deemed illegal, unethical, or not correct within an organization by an insider.

Accounting Records

Documents and files that systematically record financial transactions and positions of a company or individual.

Tax Liability

The total amount of tax that an individual, corporation, or other entity is legally obligated to pay to a tax authority.