According to the PCAOB Guidance for Auditors of Smaller Public Companies, which of the following important control characteristics is likely to exist in smaller companies?
A) Risk of management override.
B) Use of entity-level controls to achieve control objectives.
C) Limited opportunities for segregation of duties.
D) All of the above are important control characteristics existing in small company environments.

Question

Quizplus · Accepted Answer

All of the options listed are important control characteristics that are likely to exist in smaller companies according to PCAOB guidance. Smaller companies often face a higher risk of management override due to the close involvement of management in daily operations. They might rely more on entity-level controls due to resource constraints, and limited staff may result in fewer opportunities for segregation of duties.