Question

Which of the following is most likely to be considered a risk assessment procedure relating to internal control?

1) Confirm accounts receivable.
2) Perform a test of a control relating to payroll.
3) Take test counts of the year-end inventory.
4) Trace a transaction through the information system relevant to financial reporting.

Answer 1

Performing a test of a control relating to payroll is most likely to be a risk assessment procedure aimed at evaluating the effectiveness of internal controls within a company's internal control system.

Step-by-step explanation:

The question relates to identifying which option is most likely to be a risk assessment procedure regarding internal control systems. Among the choices provided, performing a test of a control relating to payroll (option 2) is most likely to be considered a risk assessment procedure.

Risk assessment procedures are part of the process of evaluating the effectiveness of a company's internal controls, and testing a specific control involves assessing whether the control is operating as intended and managing the risk it is designed to address.

In contrast, confirming accounts receivable, taking test counts of the year-end inventory, and tracing a transaction through the system are more so substantive procedures aimed at verifying the accuracy of financial statements rather than assessing risks within internal control systems.