What Are Three Factors That Have Increased the Importance of Obtaining

question 144

Essay

What are three factors that have increased the importance of obtaining an understanding of a client's business and industry?
How can an auditor obtain this understanding?

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Definitions:

Standard Cost System

An accounting system that uses predetermined costs for products or services to compare against actual costs for performance evaluation.

Actual Results

The real outcomes or final figures that have been achieved by a business after a specific period, which can be compared against forecasts or budgets.

Materials Quantity Variance

An analysis used to assess the discrepancy between the expected amount of materials and the actual amount used, based on standard costs, providing insight into manufacturing efficiency.

Quantity Standard

The expected or established amount of materials, labor, or overhead that should be used for a unit of production or a specific task.