The Auditor Is Responsible for Evaluating the Likelihood of a Client

question 25

Multiple Choice

The auditor is responsible for evaluating the likelihood of a client not being a going concern for the next 12 months. What basis will the auditor use to assess this issue?

• A)Management integrity.
• B)Control environment.
• C)Absolute assurance.
• D)Substantial doubt.

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Definitions:

Saturation

Vividness or purity of color; the dimension of visual experience related to the complexity of light waves.

Visual Stimulus

Any object or event that is seen and stimulates the visual sense, potentially eliciting a response.

Signal-detection Theory

A theory that explains how individuals differentiate between important stimuli and background noise in the environment.

Response Bias

A tendency in research respondents to answer questions in a manner that is not accurate or truthful, often due to social desirability or misunderstanding.