The concept of reasonable assurance in the context of an entity's internal controls recognizes that:
A)auditors may fail to detect material misstatements.
B)proper internal controls guarantee that material misstatements will not occur.
C)proper internal controls preclude fraud.
D)the costs of some controls may be too high to implement in relation to potential benefits.

Question

Quizplus · Accepted Answer

Reasonable assurance acknowledges that while internal controls are designed to provide a high level of assurance, they are not absolute. The costs of implementing certain controls may outweigh the benefits, so management must balance effectiveness with cost.

The Concept of Reasonable Assurance in the Context of an Entity's