Auditors Follow a Four Step Approach to Reduce Assessed Control

question 52

Multiple Choice

Auditors follow a four step approach to reduce assessed control risk. Which of the following is not one of the four?

• A) Apply transaction related audit objectives to a class of transactions.
• B) Indentify accounts that have high inherent risk.
• C) Identify key controls that reduce control risk.
• D) For potential misstatements, design appropriate substantive tests of transactions.

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Definitions:

Net Investment

The total amount spent by a company for purchasing new assets, after accounting for depreciation.

Gross Investment

The total amount spent on purchases of new capital and on replacing depreciated capital within an economy.

Net Investment

The sum of money used to purchase new capital assets, subtracting the depreciation from current capital assets.

Depreciation

The reduction in the value of an asset over time, due in particular to wear and tear.