In the Preparation of an Audit Plan, Which of the Following

question 40

Multiple Choice

In the preparation of an audit plan, which of the following items is not essential?

• A)A review of material from prior audits.
• B)The preparation of a budget identifying the costs of resources needed.
• C)An understanding of controls established by management.
• D)Assessment of inherent risk.

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Definitions:

Variable Manufacturing Overhead

Indirect production costs that vary with the level of production output, such as utilities or materials handling expenses.

Last Month

A reference to the immediate month preceding the current one.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard variable overhead expected, based on the actual activity level.

Variable Overhead

Indirect, fluctuating costs that change with the level of production or organizational activity.