An Auditor May Be Asked to Report on the Client's

question 53

Multiple Choice

An auditor may be asked to report on the client's internal control structure. Which one of the following is NOT a reason why the auditor would be asked to prepare this?

• A) It is required by contractual obligation on the client.
• B) It is required by regulatory obligation on the client.
• C) It is required by statutory obligation on the client.
• D) It is part of the financial report audit.

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Definitions:

Standard Cost System

An accounting method that uses standard costs for the cost of materials, labor, and overhead to evaluate performance and control costs.

Cost of Goods Sold

The total cost directly associated with producing goods which have been sold, including materials and labor.

Work in Process Inventories

Items in a manufacturing process that are not yet completed products, including raw materials, labor, and overhead costs.

Standard Cost Variances

refer to the differences between the expected (standard) costs and the actual costs incurred.