Which of the Following Statements Concerning Noncompliance by Clients Is

question 23

Multiple Choice

Which of the following statements concerning noncompliance by clients is correct?

• A)An auditor's responsibility to detect noncompliance that has a direct and material effect on the financial statements is the same as that for errors and frauds.
• B)An audit in accordance with generally accepted auditing standards normally includes audit procedures specifically designed to detect noncompliance that has an indirect but material effect on the financial statements.
• C)An auditor considers noncompliance from the perspective of the reliability of management's representations rather than their relation to audit objectives derived from financial statement assertions.
• D)An auditor has no responsibility for noncompliance that has an indirect effect on the financial statements.

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Definitions:

Relative Deprivation Theory

A sociological theory suggesting that individuals who perceive themselves as having less resources than others will feel deprived and may become resentful or seek change.

Economic "Booms"

Periods of significant economic growth and prosperity, characterized by increased production, employment, and consumer spending.

Economic "Busts"

Periods of significant economic decline characterized by reduced levels of activity across the economy, often including increased unemployment and decreased spending.

Unionization

The process by which workers come together to form a union in order to collectively bargain for better wages, working conditions, and other employment terms.