Use information from the following scenario to answer Questions #1-6.

You are currently planning the audit of ABC company. You have audited ABC for the previous five years. ABC is a technology company that is currently going through an IPO. Because of its inexperience complying with SOX 404 requirements, ABC still has very poor internal controls overall, although controls for sales are strong and have been found to operate effectively during interim testing. Most of its accounting procedures involve complex accounting and the heavy use of estimates. ABC is frequently featured in the financial press. Pre-tax income for the current year under audit is $10,000,000. ABCs largest and most challenging account balances are sales revenue ($143,000,000) and research and development expense ($25,000,000).

Based on the information above, you would follow which overall strategy when testing the R&D expense account?

Group of answer choices

Reliance strategy

Substantive strategy

Analytical strategy

Disclaimer strategy

Flag question: Question 6

Question 63 pts

The organization in charge of setting auditing standards for private company audits is:

Group of answer choices

The PCAOB

The FASB

The SEC

The AICPA