Which of the Following Is Most Closely Related to the Relevance

question 18

Multiple Choice

Which of the following is most closely related to the relevance of audit evidence?

• A) Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.
• B) In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.
• C) In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.
• D) Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.

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Definitions:

Exempt Employee

An employee who is exempt from overtime pay and minimum wage requirements, typically based on their job duties and salary level.

FLSA

The Fair Labor Standards Act, a US labor law that sets out minimum wage, overtime pay eligibility, recordkeeping, and child labor standards for full-time and part-time workers in the private sector and in federal, state, and local governments.

Exempt Workers

Employees not covered by the Fair Labor Standards Act (FLSA), often not eligible for overtime pay due to their job type.

Promissory Estoppel

A legal principle preventing a party from retracting a promise which the other party has reasonably relied upon to their detriment.