An Auditor's Understanding of a Client's System of Internal Control

question 102

Multiple Choice

An auditor's understanding of a client's system of internal control ________.

• A)is unrelated to the level of substantive procedures an auditor will conduct
• B)will help the auditor to determine areas of risk to direct audit attention and resources to
• C)is optional, and should only be conducted for larger clients
• D)is a helpful tool to determine the accuracy of account balances and transactions

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Definitions:

Pre-contractual Problem

Issues that arise before the formation of a contract, often relating to the disclosure of information or negotiation terms.

Incentive Compensation

A form of pay linked to an employee's performance, designed to motivate and reward that performance.

Effective

Producing a decided, decisive, or desired effect, often measuring the degree of success or efficiency of an action or item.

Car Salesman

A professional who sells new or used cars at a dealership and typically works on commission, aiming to meet or exceed sales quotas.