Why should an auditor not rely on substantive testing to the exclusion of testing internal controls?
What will be an ideal response?
A major goal in audits is to be efficient. This means performing the work in minimum time while still obtaining sufficient, appropriate audit evidence. The allocation of work between control testing and substantive testing is a cost-benefit trade-off. The more auditors rely on internal controls, the less substantive year-end work they need to do. However, auditors do not need to evaluate the entire internal
control system. They should test controls in situations when it is more efficient to test controls than to do substantive testing, such as when there is a large number of small transactions making up an account balance.
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Wizard Toy Company's marketing researcher conducted a survey to find out the percentage of customers who, after receiving a promotional mailing about a new toy, actually went out and purchased the product. This is an example of
A. personal interviews. B. quantitative research. C. an experimental method. D. cross-tabulation. E. a response rate.
Which label consists of less intense and more generalized feelings not directed at a specific object or person?
A. mood B. affects C. instinct D. emotions
Which ethical influence uses the ability to create mental pictures or interpretations to share understanding of reality?
A. emotional labor B. impression management C. proactive tactics D. framing
Which of the following phrases describes the term covenant?
A) an unconditional promise to perform B) a breach of contract C) mutual rescission of a contract D) successive assignments of a right