The Auditor's Understanding of the Client's System of Internal Control

question 75

Multiple Choice

The auditor's understanding of the client's system of internal control should be ________.

• A)discussed among audit team members only
• B)submitted to the client's internal audit function for agreement/approval
• C)well documented so it can be referred back to at any time
• D)in documentary form only and submitted to the client's attorneys for risk assessment

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Definitions:

Gross Pay

The entire sum an employee receives in earnings before any taxes or deductions are subtracted.

Deductions

Amounts subtracted from an employee's gross income to calculate taxable income, or expenses subtracted from gross revenue in accounting to determine net income.

Net Pay

The amount of money an employee takes home after deductions like taxes and retirement contributions have been subtracted from their gross pay.

Federal Insurance Contributions Act

A U.S. law that mandates the collection of Social Security and Medicare taxes from employees' paychecks and employers.