External Documentation May Lack Reliability

question 9

Multiple Choice

External documentation may lack reliability.Which of the following is the most probable reason for that?

• A)The external party may be competent in performing duties.
• B)The documentation may be properly understood by the client in the response.
• C)The auditor may decide not to use the documentation and replace it with other documents.
• D)The documentation may have been altered if the process is not controlled from inception.

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Definitions:

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its credit customers, calculated by dividing net credit sales by average accounts receivable.

Days' Sales In Receivables

A financial ratio that measures the average number of days it takes for a company to collect payments from its credit sales.

Price-Earnings Ratio

A financial ratio that measures a company's share price relative to its earnings per share, indicating investor expectations of growth and profitability.

Management Discussion And Analysis

A section in an annual report where management provides insight and perspective on the financial results, trends, and future outlook of the company.