When the Auditor Is Attempting to Determine the Extent to Which

question 98

Multiple Choice

When the auditor is attempting to determine the extent to which external users rely on a client's financial statements, they may consider several factors except for

• A) client size.
• B) concentration of ownership.
• C) nature and amounts of liabilities.
• D) assessment of detection risk.

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Definitions:

Profit Sharing

A company program that gives employees a share in the profits of the company, typically as a portion of their annual salary or as a bonus payment.

Reimbursement

To pay back or compensate for money spent, or losses or damages incurred; payment for provider services (from insurance company).

Compensation

Anything given as an equivalent or to make amends; pay.

Insurance Company

A financial institution that provides risk management through the mechanism of insurance contracts, covering various types of risks including health, property, and life.