If a Program to Be Subjected to a Performance Audit

question 3

Multiple Choice

If a program to be subjected to a performance audit lacks clearly defined objectives, what can the auditor do?

• A) Decline the audit until the entity defines its objectives.
• B) Personally discern the objectives based on the auditor's opinion.
• C) Examine the legislation to see if the legislation articulated the goals and objectives of the program.
• D) Create a list of goals and objectives.

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Definitions:

Setup Cost

Costs incurred to prepare equipment, machinery, or production lines for manufacturing a new product or batch.

ERP

Enterprise Resource Planning, a type of software that organizations use to manage and integrate important parts of their businesses, including finance, supply chain, operations, and human resources.

Net Requirements

The total quantity needed of a particular item, considering current inventory levels and future orders but excluding any on-hand inventory.

Gross Requirements

represent the total amount of materials or products required to meet production demands, before accounting for any existing inventory.