The Specific Performance Criteria to Be Used in an Operational

question 4

Multiple Choice

The specific performance criteria to be used in an operational audit are:

• A) selected from existing relevant policy statements, manuals, laws, or regulations, or are defined by the auditor for each operational audit.
• B) defined in Australian Accounting Standards.
• C) the same as the criteria used in evaluating the internal control structure in an engagement to report on the internal control structure over financial reporting.
• D) defined in Australian Auditing Standards.

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Definitions:

Direct Labor Time Variance

The difference between the estimated time to produce a good and the actual time taken, often used in cost accounting.

Actual Costs

Actual costs are the expenses that a company incurs for producing goods or services, including materials, labor, and overhead, as opposed to estimated or budgeted costs.

Standard Costs

The predetermined costs of manufacturing a product or providing a service, used as benchmarks against actual costs.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit of material.