In Making Judgments About the Effect of the Internal Auditors

question 93

Multiple Choice

In making judgments about the effect of the internal auditors' work on the external auditor's procedures in specific audit areas, which of the following is not one of the issues related to the specific audit areas that is considered by the external auditor?

• A) Materiality of the financial statement amounts.
• B) Risk of material misstatement of the assertions related to these financial statement amounts.
• C) Degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions.
• D) All of the above are considered by the auditor.

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Definitions:

Cost Center

A segment within an organization that is responsible for incurring costs, without directly contributing to the company’s income.

Sales Journal

A record of sales transactions where credit sales are recorded.

Gross Profit

The financial metric that represents the difference between sales revenue and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.

Profit Center

A branch or division of a company that is treated as a separate entity for the purpose of calculating its profitability.