An Auditor Is Engaged to Audit the Eastern Planning and Development

question 36

Multiple Choice

An auditor is engaged to audit the Eastern Planning and Development District, a not-for-profit entity that receives federal financial assistance. The auditor designed his audit to provide reasonable assurance of detecting material misstatements resulting from illegal acts. What additional requirements does the auditor have with regard to compliance?

• A) None.
• B) The auditor must design the audit to provide reasonable assurance of detecting noncompliance with terms of grants and contracts.
• C) The auditor must design the audit to provide reasonable assurance of detecting all misstatements resulting from illegal acts.
• D) The auditor must design the audit to provide reasonable assurance of detecting any fraud.

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Definitions:

Scientific Method

A systematic and empirical approach to research in which a problem is identified, hypotheses are formulated, experiments or observations are conducted, and conclusions are drawn.

Ice Cream

A frozen dessert made from dairy products, sweeteners, and flavorings, enjoyed as a treat or snack.

Buying Behavior

The decision processes and acts of individuals involved in buying and using products.

Opportunity Cost

The cost of an alternative that must be forgone as a result of choosing another option, representing the benefits that could have been received by taking a different path.