CPA · Question 26 · Area 2: Risk Assessment
Which of the following statements correctly describes the relationship between 'Significant Risks' and internal control testing?
Answer options:
Controls over significant risks can be tested every third year (rotational testing).
If the auditor plans to rely on controls over a significant risk, those controls must be tested in the current period.
Significant risks must always be addressed by substantive procedures alone; control testing is not permitted.
Inquiry and observation are sufficient to test controls over significant risks.
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