In Planning the Audit, an Auditor Takes Three Basic Steps

question 40

Essay

In planning the audit, an auditor takes three basic steps in determining the audit procedures to be performed for any business cycle or class of transactions in order to gather audit evidence concerning possible misstatement due to error or fraud. List those three basic steps below.

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Definitions:

Market Share

The portion of a market controlled by a particular company or product.

Profitability

A measure of the efficiency of a company in generating profits from its revenue.

Unit Costs

Unit costs refer to the cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Learning Curve Effects

The observed reduction in production costs and increase in efficiency as a company gains experience in manufacturing a product or providing a service.