In performing the audit of internal control over financial reporting, the auditor emphasizes internal control over classes of transactions because
A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing.
B) the class of transaction is where most fraud schemes occur.
C) account balances are less important to the auditor then the changes in the account balances.
D) classes of transactions tests are the most efficient manner to compensate for inherent risk.

Question

Quizplus · Accepted Answer

Internal control over classes of transactions is emphasized in the audit because the accuracy of accounting system outputs is heavily dependent on the accuracy of inputs and processing. Therefore, the auditor focuses on testing the controls in place for key classes of transactions to ensure that the accounting system is producing accurate financial statements. This is because errors or misstatements in transactions can have a significant impact on the overall financial statements.

In Performing the Audit of Internal Control Over Financial Reporting