Which of the Following Is an Effective Way for an Internal

question 369

Multiple Choice

Which of the following is an effective way for an internal auditor to improve communications with the client during a contentious audit?

• A) Encourage the client to participate as a partner in the decision-making process to determine the changes that need to be made.
• B) Clearly explain to the client the role of the internal audit activity in the change process.
• C) Obtain the support of the board of directors for proposed changes before discussing the changes with operating management.
• D) Speak privately with key client personnel immediately after proposed changes are announced to address their concerns.

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the proportion of a company’s assets that are financed by its shareholders' equity, indicating the level of debt used to finance assets.

Net Profit Margin

A profitability ratio that shows what percentage of sales has turned into profits after all expenses are deducted.

Gross Margin

The difference between sales revenue and cost of goods sold, often expressed as a percentage, indicating the profitability of a company's core activities.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest payments based on its operating income.