An Auditor Is Required to Establish an Understanding with a Client

question 54

Multiple Choice

An auditor is required to establish an understanding with a client regarding the responsibilities for each engagement. This understanding generally includes:

• A)management's responsibility to guarantee that there are no material misstatements due to fraud.
• B)the auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute, assurance of detecting material errors or fraud.
• C)management's responsibility for providing the auditor with an assessment of the risk of material misstatement due to fraud.
• D)the auditor's responsibility for the fairness of the financial statements.

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Definitions:

Board Of Directors

A group of individuals elected to represent shareholders and make decisions on major company issues, such as corporate policy, hiring executives, and overseeing management.

Market Rate Of Return

The average rate of return anticipated from an investment relative to the market as a whole.

Required Return

The minimum expected return by investors for assuming the risk of investing in a particular asset or project.

Constant

In finance, this often refers to a fixed value or number that does not change over time in formulas or calculations.