Obtaining an Adequate Understanding of the Client's Business Is Important

question 24

Multiple Choice

Obtaining an adequate understanding of the client's business is important in physical observation of inventory because

• A)it is required by GAAP.
• B)it will help the auditor in assessing the risk of theft of inventory.
• C)inventory is normally a significant item.
• D)inventory varies significantly for different companies.

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Definitions:

Probably Ethical

Describes actions or decisions that are likely to be considered morally right, in line with accepted moral standards.

Approved

An acknowledgment or sanction indicating that something meets required standards, policies, or conditions for acceptance or implementation.

Customary

Established patterns of behavior or practices that are considered accepted and traditional within a particular social, cultural, or professional group.

Bribery

The offering, giving, receiving, or soliciting of something of value as a means of influencing the actions of an individual or group in a position of power.