Which of These Requires External Auditors to Understand a Client's

question 58

Multiple Choice

Which of these requires external auditors to understand a client's system of internal controls before conducting an audit-an understanding aided by documentation?

• A)SAS 1
• B)AS 2201
• C)The Securities and Exchange Act of 1939
• D)SOX Act of 2002

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Definitions:

Participative Budgeting

A budgeting process where workers at all levels are involved in setting budget goals and objectives, fostering collaboration and buy-in.

Top Management

The highest level of managerial staff responsible for setting strategic goals and leading an organization.

Strategic Plan

A Strategic Plan is a company's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people.

Financial Consequences

The economic effects or outcomes that result from financial decisions or actions, which can affect an individual's or organization's financial health.