What Is an Audit Committee

question 8

Multiple Choice

What is an audit committee?

• A) It is a group of audit firms that develop national or international standards for auditing practice.
• B) It is a subset of a corporate board of directors with oversight of the auditing function.
• C) It is the team of external auditors (i.e. CPAs) that conducts audit testing and prepares the audit report.
• D) It is a management group responsible for negotiating the audit engagement with a public accounting firm.

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Definitions:

Not-For-Profit Entity

A not-for-profit entity is an organization that operates for charitable, educational, or social purposes rather than generating profit for shareholders or owners.

Donor Retains Control

A situation where a donor gives a gift or assets but maintains a level of decision-making power or influence over those assets or their management.

Provision for Bad Debts

An accounting concept that represents an allowance for receivables that may not be collectible.

Uncollectible and Reduced Accounts

Refers to accounts receivable that a business deems unlikely to be collected and therefore reduces their value on the financial statements.