Which of the Following Is Not an Inquiry the Auditor

question 657

Multiple Choice

Which of the following is not an inquiry the auditor should make to identify the risks of material misstatement due to fraud?

• A) How management communicates to employees its views on acceptable business practices.
• B) Whether operating personnel have communicated to management regarding internal control and how it functions to prevent, deter, or detect material misstatement due to fraud.
• C) Whether there are any particular business segments for which a risk of fraud may be more likely to exist.
• D) Whether management is aware of any allegations of fraud.

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Definitions:

Bond's Duration

Bond's duration measures the sensitivity of a bond's price to changes in interest rates, quantified as the weighted average time until the bond's cash flows are received.

Time To Maturity

Time to maturity refers to the remaining time until a financial instrument, such as a bond or loan, reaches its scheduled end date and the principal must be repaid.

Zero-Coupon Bond

A bond that is sold at a discount to its face value and pays no interest before maturing, at which point its face value is repaid to the holder.

Discount Rate

The interest rate used to calculate the present value of future cash flows, representing the opportunity cost of capital.