When Analyzing a Client's Performance Measurement System

question 170

Multiple Choice

When analyzing a client's performance measurement system,

• A) ratio analysis and benchmarking against key competitors are utilized.
• B) only income statement numbers are used.
• C) inherent risk of financial statement misstatements may be decreased if the performance measurement system encourages aggressive accounting.
• D) the auditor is likely to decrease the extent of testing if the client has set unreasonable objectives.

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Definitions:

Establishment Clause

One of two provisions in the First Amendment of the U.S. Constitution that protect citizens’ freedom of religion. It prohibits (1) the establishment of a national religion by Congress and (2) the preference of one religion over another or of religion over nonreligious philosophies in general.

First Amendment

An amendment to the U.S. Constitution protecting freedoms concerning religion, expression, assembly, and the right to petition.

Fourth Amendment

A provision in the United States Constitution that protects citizens from unreasonable searches and seizures, ensuring the right to privacy.

Thermal Imager

is a device that converts infrared radiation (heat) into visible light in order to analyze a particular object or scene.