Answer (D) is correct . Management makes certain assertions about the financial statements (existence, rights and obligations, etc.). The goal of an audit is to assess the fair presentation of the financial statements. The auditor’s consideration of the client’s system of internal control is a means to that end.
Answer (A) is incorrect because No system of internal control can prevent management override.
Answer (B) is incorrect because The client’s internal control structure necessarily relates to the control environment.
Answer (C) is incorrect because While the internal control structure should reflect management’s philosophy and operating style, it is not the auditor’s primary concern.
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