How does management’s cost–benefit trade-off decision affect control risk?
Answer to relevant QuestionsWhy do internal controls provide reasonable but not absolute assurance that control objectives are met? Can control risk be high for one assertion and low for another assertion for the same account balance? Explain. What is the purpose of an internal control systems flow chart? How does it differ from a narrative? How does the direction of a control test relate to control objectives? What is the impact on audit work of a “clean” audit as compared with a “dirty” audit?
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