When a compensating control exists, a deficiency in the system:
A) is magnified and must be removed from the sampling process and examined in its entirety.
B) could cause a material loss, so it must be tested using substantive procedures.
C) is reduced but not removed; therefore, it is still of concern to the auditor.
D) is no longer a concern because the potential for misstatement has been sufficiently reduced.

Question

Quizplus · Accepted Answer

The compensating control reduces the risk of material misstatement to an acceptable level, so it is no longer a concern.

When a Compensating Control Exists, a Deficiency in the System