A Correct Relationship Among the Auditor, the Client, and the External

question 26

Multiple Choice

A correct relationship among the auditor, the client, and the external users is

• A) management of a public company hires the independent auditor.
• B) the audit committee of a private company hires the independent auditor.
• C) the client provides capital to the external users.
• D) the external users can rely upon the auditor's report to reduce information risk.

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Definitions:

Spot Rate

The current market price used for immediate settlement of a currency, security, or commodity transaction.

Hedge Accounting

An accounting method that modifies the normal treatment of gains and losses from hedging activities so that they are recorded in the same period as the offsetting gains or losses on the hedged item.

Foreign Currency Firm Commitments

Agreements to execute a financial transaction in a foreign currency at a future date, at a predetermined rate or price.

Cash Flow Hedge

A form of hedge accounting that aims to reduce the exposure to variability in cash flows related to a specific risk.