In Order for an Auditor to Gain an Understanding of an Entity

question 14

Essay

In order for an auditor to gain an understanding of an entity and its environment it should consider the entity's industry conditions, regulatory environment and any economy-wide factors.Give two examples of what an auditor may consider in each.

---

Definitions:

Marginal Revenue Product

The extra income created from the use of one additional unit of a production resource or input.

Acres

A unit of land area used in the imperial and US customary systems, equivalent to 4,840 square yards or approximately 4,047 square meters.

Marginal Revenue Product

The extra income produced by using an additional unit of a production input, like labor or capital.

Productivity

Refers to the measure of output per unit of input.