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:

Coal

A black or brownish-black sedimentary rock that is formed from compressed organic matter and used as a fuel.

Rites of Enhancement

Traditional or ceremonial acts that improve or elevate the status of individuals within a community or organization.

Company Awards Ceremonies

Formal events organized by a business to recognize and celebrate the achievements and contributions of its employees.

Ball Corporation

A multinational company known for its production of aluminum packaging for beverages, personal care, and household products, as well as aerospace technology.