During an Audit of Financial Contracts, an Auditor Learns That

question 243

Multiple Choice

During an audit of financial contracts, an auditor learns that a relative has a substantial loan with the organization. The auditor should:

• A) Exclude the relative's information from the audited work and proceed with the audit engagement.
• B) Proceed with the audit engagement but disclose in the engagement final communication that the relative is a customer.
• C) Immediately withdraw from the audit engagement.
• D) Notify management and the chief audit executive (CAE) and have the CAE determine whether the auditor should continue with the audit engagement.

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Definitions:

Price Rise

an increase in the cost of goods or services over time, also known as inflation in an economic context.

Supply Shift

A change in the supply curve of goods or services caused by factors other than price changes, leading to a new equilibrium in the market.

Good Z

A hypothetical product or service used in economic examples to discuss theories and concepts.

Cornstalks

The stems of corn plants, which can be used as fodder for animals, in biofuel production, or as a raw material in various industries.