Which of the following types of evidence would an auditor
most likely examine to determine whether internal control is
operating as designed?

(c) The requirement is to identify the type of evidence
an auditor would examine to determine whether internal control
is operating as designed. Answer (c) is correct because the inspection
of documents and records such as those related to computer
programs represents an approach for obtaining an understanding
of internal control. Answer (a) is incorrect because
examining gross margin information is more likely to be performed
during the performance of analytical procedures. Answer
(b) is incorrect because confirming of receivables is a substantive
test. Answer (d) is incorrect because anticipated results
documented in budgets or forecasts are much more frequently
used in the performance of analytical procedures.