A Thorough Understanding of the Client's Business and Industry and Knowledge

question 18

Multiple Choice

A thorough understanding of the client's business and industry and knowledge about the company's operations are essential for doing an adequate audit. Why do auditors need greater knowledge about major customers and suppliers and related risks?

• A) Information technology connects these organizations, so they affect each other.
• B) Information technology provides rapid information about organizations.
• C) There is increased importance of human capital and other intangible assets.
• D) Joint ventures and strategic alliances affect client business risks.

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Definitions:

Accuracy

The degree to which information is correct, precise, and free from error.

Microaggression

Subtle, often unintentional, discriminatory comments or actions against members of a marginalized group.

Congruent Statement

A congruent statement is an expression or communication that is consistent with one's true feelings, thoughts, and behaviors, promoting authenticity.

Empathic Response

A reaction that demonstrates understanding and sharing of another's emotional experience.