There Are Two Important Assumptions That Underly the Auditor's Use

question 133

Multiple Choice

There are two important assumptions that underly the auditor's use of external confirmations.The first is that the person returning the confirmation is independent of the company and so will provide an unbiased response.The second is that

• A)only authorized employees of the company have prepared the response.
• B)the person completing the response has carefully checked the data being confirmed.
• C)the respondent has not been coerced or bribed to respond to the confirmation.
• D)adequate controls exist at the client company to prevent unauthorized responses.

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Definitions:

Empirical Economics

The collection and use of data to test economic theories.

Regression Analysis

A statistical technique used to estimate the relationships among variables, often used for prediction and forecasting.

P-value

A statistical metric that helps determine the significance of results, indicating the probability of observing the given data if the null hypothesis is true.

Statistically Significant

A determination that a relationship between two or more variables is caused by something other than chance.