The Second Standard of Field Work Requires the Auditor to "Understand

question 16

Essay

The second standard of field work requires the auditor to "understand the entity and its environment, including internal control." List the five different areas this standard requires the auditor to understand.

---

Definitions:

Federal Reserve System

The central bank of the United States, responsible for monetary policy, financial regulation, and stability of the financial system.

Great Depression

A severe worldwide economic downturn that lasted throughout the 1930s, marked by widespread unemployment, deflation, and a significant decline in economic output.

National Banks

National banks are financial institutions chartered by the federal government of a country, authorized to provide a variety of banking services, including accepting deposits, making loans, and issuing currency.

Interest-rate Ceilings

Regulatory limits placed on the maximum interest rates that can be charged on loans, intended to protect borrowers.