A Performance Audit Engagement Typically Involves

question 341

Multiple Choice

A performance audit engagement typically involves:

• A) Review of financial statement information, including the appropriateness of various accounting treatments.
• B) Tests of compliance with policies, procedures, laws, and regulations.
• C) Appraisal of the environment and comparison against established criteria.
• D) Evaluation of organizational and departmental structures, including assessments of process flows.

---

Definitions:

Gross Method

An accounting method for recording purchases at the invoice's full amount without deducting any cash discounts.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, payroll, taxation, and interest.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, rather than continuously.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements.