Auditors Are Required to Obtain a Sufficient Understanding of an Entity's

question 111

Essay

Auditors are required to obtain a sufficient understanding of an entity's internal control.This understanding is required by the performance principle of GAAS.What are some of the goals (purposes) for conducting an evaluation of an entity's internal control?

Recognize the differences and similarities between rationalism and empiricism.

Identify common errors and biases in perception, memory, and cognition.

Assess the reliability and importance of evidence in forming beliefs and arguments.

Differentiate between various sources of evidence and their relative reliability.

---

Definitions:

Risk Aversion

In decision making, the greater weight given to possible losses than possible gains.

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, leading to impulsive decisions.

Attractive Woman

A subjective evaluation that denotes a female individual whom the majority perceives as having aesthetically pleasing physical features.

Financial Circumstances

The condition of an individual's or entity's economic resources, including income, assets, and liabilities.