Discuss the Factors an Auditor Should Consider Before Accepting a Company

question 105

Essay

Discuss the factors an auditor should consider before accepting a company as an audit client.

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Definitions:

Abnormal Returns

Returns on a stock or portfolio that exceed the benchmark or expected return based on the risk assessment.

Rights Offering

A method by which a company offers new shares to its existing shareholders in proportion to their existing holdings, typically at a discount to the market price.

Subscription Price

The cost at which investors can purchase shares during a company's initial public offering (IPO) or when subscribing to a new issue of shares.

Bearish

A term used in trading to describe the expectation that a market, stock or price will decline.