When Auditing a Private Company, the Auditor Should Obtain an Understanding

question 65

Multiple Choice

When auditing a private company, the auditor should obtain an understanding of internal control sufficient to:

• A)provide reasonable protection against client fraud and defalcations by client employees.
• B)assess control risk.
• C)provide a basis for suggestions to the client for improving the accounting system.
• D)provide a method for safeguarding assets, checking the accuracy and reliability of accounting data, promoting operational efficiency, and encouraging adherence to prescribed managerial policies.

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Definitions:

Usury Law

Legislation that sets maximum interest rates that can be charged on loans to protect consumers from excessively high rates.

Loanable Funds

The money available for borrowing in the financial markets, determined by the savings of individuals and entities and the banking system's capacity to lend.

Usury Law

Regulations governing the maximum interest rate that can be charged on loans, aimed at protecting consumers from excessively high rates.

Loanable Funds

A theory in economics that suggests the market interest rate is determined by the demand for and supply of money available for lending.