What Type of Direct Inquiry Does an Auditor Make of the Audit

question 28

Multiple Choice

What type of direct inquiry does an auditor make of the audit committee regarding the potential for fraud?

• A)The auditor inquires about the audit committee's role in preventing and detecting fraud.
• B)The auditor inquires about the audit committee's role to communicate with vendors.
• C)The auditor inquires about the audit committee's role in the auditor brainstorming session.
• D)The auditor inquires about the audit committee's role in determining performance materiality for the audit.

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Definitions:

Cost of Capital

The rate of return a company must pay to its creditors and shareholders for the use of their capital.

Subjective Approaches

Methods or considerations based on personal opinions, interpretations, feelings, or judgments rather than objective facts or analysis.

Pure Play Approaches

Investment strategies that focus on companies that specialize in a particular product or service, excluding diversified or conglomerate firms.

Cost of Capital

The rate of return required by a capital provider, whether debt or equity, to make an investment in a project, asset, or firm.