For Audit Evidence to Be Compelling to the Auditor It

question 69

Multiple Choice

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

• A) The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client.
• B) An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm.
• C) Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity.
• D) The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly.

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Definitions:

Resale Price Maintenance

A practice where a manufacturer or wholesaler controls the retail price at which products are sold by retailers, often to maintain brand image or prevent price wars.

Anticompetitive Effects

Refer to actions or outcomes that reduce competition in a market, leading to less consumer choice and possibly higher prices.

Lawful

Conforming to, permitted by, or recognized by law and regulations.

Sherman Act

A landmark federal statute in the United States antitrust law passed by Congress in 1890 that prohibits monopolistic practices and promotes competition.