A Privity Letter

question 15

Multiple Choice

A privity letter:

• A) sets out the terms of a contractual audit engagement.
• B) is a written acknowledgement of a third party's reliance on audited financial statements.
• C) can be used to disclaim liability in a statutory audit.
• D) must be sent to management when control deficiencies are discovered during an audit.

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Definitions:

Excess Demand

A market condition where the quantity demanded of a product exceeds the quantity supplied at a given price.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers.

Market Price

The current price at which an asset or service can be bought or sold in a particular market.