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:

Residual Income

Operating income that remains after deducting all required costs of capital from net operating profits, often used in performance measurement.

ROI

ROI, or Return on Investment, measures the efficiency or profitability of an investment by dividing the net profit from the investment by the initial cost of the investment, typically expressed as a percentage.

Residual Income

The income that an entity generates after accounting for all operational and capital expenses, often used to assess the profitability of investment centers within a business.

Return on Investment

A measure of the profitability of an investment, calculated as the ratio of net profits to the initial cost of the investment.