How Is Lack of Understanding of a Client's Knowledge and Industry

question 12

Multiple Choice

How is lack of understanding of a client's knowledge and industry linked to the auditor's business risk?

• A)sales and collection processes need to be carefully documented so that the auditor can assess the value of accounts receivable.
• B)failure to fully understand the nature of the client's transactions could result in litigation should the client fail.
• C)the auditor may not be adequately trained to understand the nature of the client's business and thus may conduct a poor quality audit.
• D)there may not be sufficient expertise assigned to the audit engagement,resulting in a lack of understanding of complex issues.

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Definitions:

Jacobins

The Jacobins were a radical and influential political group during the French Revolution, advocating for democracy and equality.

Napoleon

Napoleon Bonaparte, a French military leader and emperor who rose to prominence during the French Revolution and significantly altered European political landscapes.

Egypt

A country in North Africa, known for its ancient civilization, the Nile River, pyramids, and pharaonic monuments, with a rich cultural heritage and significant historical influence.