With Respect to Key Performance Indicators, Auditors Should ________

question 67

Multiple Choice

With respect to Key Performance Indicators, auditors should ________.

• A)disregard them as they would be unrelated to the audit
• B)ask management to provide a detailed explanation of which KPIs are of the most importance to them so that related audit procedures can be planned
• C)assign the task of investigation to the internal audit function
• D)assign new KPIs to the client as a result of the audit process

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Definitions:

Relevant Range

The range of activity within which assumptions about variable and fixed cost behavior are valid.

Cost Behaviour

The way in which a cost changes or reacts in relation to changes in business activity levels.

Variable Selling Expenses

Sales-related costs that vary directly with the volume of sales, such as commissions and shipping charges.

Contribution Approach

An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated according to organizational functions.