One of the Purposes of Developing a Client Risk Profile

question 24

Multiple Choice

One of the purposes of developing a client risk profile is to assist the auditor in

• A)developing the pertinent audit procedures for tests of internal controls.
• B)assessing the client's business risk.
• C)locating related parties that need to be disclosed.
• D)deciding whether fraud or illegal acts have taken place.

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Definitions:

Internal Controls

Procedures and policies implemented within an organization to safeguard its assets, enhance the reliability of accounting records, and increase efficiency.

Effectiveness

A measure of the degree to which objectives are achieved and the extent to which targeted problems are solved, without necessarily considering the resources used.

Accounting Records

Documents and books that keep track of all financial transactions of a business or individual.

Internal Control

Procedures and processes implemented by a company to safeguard its assets, ensure financial reporting accuracy, and promote operational efficiency.