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AAA – L3 – SA – Q5.5 – The audit approach
Why use a business risk approach for auditing large companies?
Question
What is the main justification for the use of a business risk approach to an audit of large companies?
A A systems-based approach and a substantive testing approach are unlikely to detect material misstatements in the financial statements of large companies.
B This approach forces the auditors to understand the client’s business in depth.
C It is more effective than other approaches to audit in detecting deficiencies in internal control.
D Major audit problems in large companies are more likely to result from business-related problems than from deficiencies in internal control.
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