With Respect to Relying on the Work of the Internal

question 126

Multiple Choice

With respect to relying on the work of the internal audit function, external auditors should ____________.

• A)always be willing to accept work completed and documentation provided
• B)never be willing to accept work completed by the internal audit function
• C)impartially assess the objectivity, competence and processes of the internal audit function
• D)always assign junior members of the audit team to assist the internal audit function

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Definitions:

Debt-to-equity Ratio

A ratio indicating the balance between shareholder equity and debt used in the financial structuring of a company's assets.

Receivable Turnover

A financial metric indicating how quickly a company collects payments owed from its customers, often measured over a year.

Inventory Turnover

A financial ratio that measures how frequently a company sells and replaces its inventory over a specific period.

Current Ratio

A metric assessing a business's ability to handle its due within one-year obligations, obtained by the ratio of current assets to current liabilities.