To Adequately Plan the Appropriate Audit Evidence, Generally Accepted Auditing

question 36

Multiple Choice

To adequately plan the appropriate audit evidence, generally accepted auditing standards require the auditor to gain an understanding of the internal control structure.This understanding is obtained by:

• A) discussions with client personnel.
• B) observing client activities.
• C) reviewing organisational charts and procedural manuals.
• D) all of the above

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Definitions:

Economic Efficiency

The optimal allocation of resources to maximize the production of goods and services.

Creative Destruction

A concept in economics which signifies the process by which new innovations lead to the demise of older technologies, leading to economic progress.

Federal Trade Commission

A federal agency charged with protecting consumers and ensuring a strong competitive market by enforcing antitrust and consumer protection laws.

Wheeler-Lea Act

The federal law of 1938 that amended the Federal Trade Commission Act by prohibiting unfair and deceptive acts or practices of commerce (such as false and misleading advertising and the misrepresentation of products).