The Efficiency of Internal Audit Operations Is Best Enhanced If

question 372

Multiple Choice

The efficiency of internal audit operations is best enhanced if workpaper standards:

• A) Permit the extent of documentation to vary according to engagement objectives.
• B) Require supervisors to initial and date each workpaper that they review.
• C) Allow access to workpapers by external parties if approved by senior management or the audit committee.
• D) Mandate the workpaper retention period.

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Definitions:

ACP

Average Collection Period, indicating the average number of days it takes a company to collect payments from its credit sales.

Du Pont Analysis

A framework for analyzing a company's return on equity (ROE) by breaking it down into its constituent components to assess operational efficiency.

Total Assets Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using shareholders’ funds to generate profit.