In understanding the client's control activitiat the entity level, consideration is given to factors such as:
A) the extent to which performance of control activities relies on IT.
B) the extent to which controls included in the organization's policies are being applied.
C) whether adequate safeguards are in place to prevent unauthorized access to or destruction of documents, records and assets.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the factors listed are relevant in understanding the client's control activities at the entity level. The first factor (A) is important because IT systems are often relied upon to perform key control activities, so their effectiveness is critical. The second factor (B) is important because policies are an important tool for establishing a control environment, but their effectiveness depends on whether they are actually being followed by employees. The third factor (C) is important because preventing unauthorized access to documents, records, and assets is a key objective of many control activities. Therefore, all of these factors should be considered in evaluating the effectiveness of the client's control activities at the entity level.

In Understanding the Client's Control Activitiat the Entity Level, Consideration