Which of the Following Events Would Most Likely Cause the Chief

question 213

Multiple Choice

Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan? 1. The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product. 2. A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product. 3. The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year. 4. An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.

• A) 1 and 2 only
• B) 1 and 3 only
• C) 2 and 4 only
• D) 3 and 4 only

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Definitions:

Current Consumption

The portion of income or wealth that is spent on goods and services in the present, as opposed to saving for future expenditure.

Future Consumption

The saving or postponing of consumption today in order to consume in the future, often considered in economic theories of savings and investment.

Real Rate

The interest rate adjusted for inflation, reflecting the real purchasing power of interest earnings.

Nominal Rate

The interest rate before adjusting for inflation, reflecting the percentage that is paid for the use of money.