Which of the Following Is Not a Qualitative Factor That

question 20

Multiple Choice

Which of the following is not a qualitative factor that may affect an auditor's establishment of materiality?

• A)Potential for fraud.
• B)The company is close to violating loan covenants.
• C)Firm policy sets materiality at 4% of pretax income.
• D)A small misstatement would interrupt an earnings trend.

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Definitions:

Forward Rate

A term used in finance representing the interest rate applicable to a financial transaction that will occur in the future.

Interest Rate Parity

A theory stating that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Canadian T-Bills

Short-term government securities issued by the Canadian government, considered low-risk investments.

Egyptian Pounds

The official currency of Egypt, denoted as EGP, and divided into smaller units called piastres.