From Glossary

Question 1

Arm’s length transaction

Answer 1

A transaction conducted on such terms and conditions as between a willing buyer and a willing seller who are unrelated and are acting independently of each other and pursuing their own best interests

Question 2

Business risk

Answer 2

A risk resulting from significant conditions, events, circumstances, actions or inactions that could adversely affect an entity’s ability to achieve its objectives and execute its strategies, or from the setting of inappropriate objectives and strategies

Question 3

Control activities

Answer 3

Those policies and procedures that help ensure that management directives are carried out. Control activities are a component of internal control

Question 4

Control environment

Answer 4

Includes the governance and management functions and the attitudes, awareness and actions of those charged with governance and management concerning the entity’s internal control and its importance in the entity. The control environment is a component of internal control.

Question 5

Internal control

Answer 5

The process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to:

• Reliability of financial reporting
• Effectiveness and efficiency of operations
• Compliance with applicable laws and regulations

Question 6

Overall audit strategy

Answer 6

Sets the scope, timing and direction of the audit, and guides the development of the more detailed audit plan