PCAOB Standards Require the Auditor to Evaluate the Effectiveness of the Audit

question 48

Multiple Choice

PCAOB standards require the auditor to evaluate the effectiveness of the audit committee as part of understanding the control environment and monitoring. Which of the following is not a factor the auditor should consider in making this evaluation?

• A) The audit committee's responsiveness to issues raised by the auditor.
• B) The independence of the audit committee from management.
• C) Compensation practices with respect to members of the audit committee.
• D) The clarity with which the audit committee's responsibilities are articulated.
• E) The audit committee's interaction with key members of financial management.

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Definitions:

Income Shares

A method often used in family law to determine the amount of child support payments based on the proportional income of each parent.

National Income

The total value of all goods and services produced by a country over a specific period, usually measured as Gross National Product (GNP) or Net National Product (NNP).

Capitalists

Individuals or entities that own capital goods, invest in production, and seek to generate profits within an economy.

Labor

The application of physical and cognitive labor in the manufacture of goods and provision of services.