An Important Reason for Auditors to Obtain Good Knowledge of a Client's

question 23

Multiple Choice

An important reason for auditors to obtain good knowledge of a client's industry is that

• A)payroll processing functions could differ from client to client.
• B)control risks will vary from zero to 100% and can be better assessed in context.
• C)detection risk must be set in accordance with the needs of the industry as well as of the individual client.
• D)organizations like city governments have unique accounting requirements that could be complex.

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Definitions:

Performance

The level of achievement or efficiency with which an individual or organization meets objectives or carries out tasks.

Management Forecasts

Predictions or estimates made by a company's management regarding future business conditions, performance, and operational needs.

Quantitative Measurements

The process of capturing and analyzing numerical data to make decisions, assess outcomes, or evaluate performance.

Future Employment Needs

The projected requirements of the workforce, including the number and types of jobs available in the future.