If a Company's Net Income Varies Significantly from Year to Year

question 111

True/False

If a company's net income varies significantly from year to year, the auditor might consider using an average of the net income from the prior three to five years as the materiality benchmark.

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Definitions:

Theory O Change

A change management approach focusing on organizational culture and employee involvement to drive long-term transformation.

Organisational Culture

The shared values, beliefs, norms, and practices that guide and shape the behavior of people within an organization.

Human Capital

Human capital represents the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value to an organization.

Internal Forces

Factors within an organization, such as employees' skills, corporate culture, and management policies, influencing its operations and performance.