The Management Letter

question 15

Multiple Choice

The management letter:

• A) is required by ASA 580 whenever there are 'reportable conditions'.
• B) must follow the format prescribed by the ASIC.
• C) spells out to the audit committee the auditor's responsibilities under generally accepted auditing standards.
• D) is optional and is intended to help the client operate its business more effectively.

Understand the concept of market value versus book value and the factors that influence both.

Evaluate the financial implications of share repurchase programs versus dividend payments.

Calculate the effect of dividend declaration and payment dates on investor dividend income.

Understand the impact of earnings and retention ratio on dividend payments and shareholder wealth.

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Definitions:

Normalizing

The process of making certain behaviors, values, or conditions seem normal within a society or group, often through repeated exposure or endorsement.

Excusing

The act of justifying or rationalizing one's behavior or mistakes to lessen responsibility or guilt.

Quid Pro Quo Sexual Harassment

Takes place when sexual threats or bribery are made a condition of employment decisions.

Sexual Threats

Expressions or actions intended to frighten or coerce individuals by invoking fear of sexual violence or harassment.