An Auditor Need Not Abide by a Particular Auditing Standard

question 66

Multiple Choice

An auditor need not abide by a particular auditing standard if the auditor believes that

• A) the issue in question is immaterial in amount.
• B) more expertise is needed to fulfill the requirement.
• C) the requirement of the standard has not been addressed by the PCAOB.
• D) fraud is involved.

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Definitions:

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue, such as machinery, buildings, and inventory.

Return On Investment

A measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments, calculated as net profit divided by the cost of the investment.

Return On Investment Ratio

A financial metric used to evaluate the efficiency of an investment, calculated by dividing the net profit by the original capital cost of the investment.

Judgmental Factors

Elements that require personal assessment and decision-making in the valuation of assets, determination of liabilities, or other financial reporting activities.