An Auditor's Examination Performed in Accordance with Australian Auditing Standard

question 29

Multiple Choice

An auditor's examination performed in accordance with Australian auditing standard ASA 240 generally should:

• A) be relied upon to disclose violations of client confidentiality.
• B) ensure a review of conditions and events that increase the risk of irregularity.
• C) encompass a plan to search actively for illegalities which relate to environmental reporting.
• D) guarantee that illegal acts will be detected.

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Definitions:

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production activity, such as utilities and materials.

Direct Labor-hours

The full amount of labor hours by employees directly contributing to the generation of products or services.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on a standard rate.

Variable Manufacturing Overhead

Costs that vary with the level of production output, such as utilities or raw materials.