The "Obtaining an Understanding" Work Phase (Phase 1) of Internal

question 61

Multiple Choice

The "obtaining an understanding" work phase (Phase 1) of internal control evaluation would not give auditors an overall acquaintance with the client's:

• A)control environment.
• B)information and communication system.
• C)control activity effectiveness.
• D)monitoring activities.

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Definitions:

Standard Input Measure

A benchmark for the amount of resources (materials, labor, and overhead) expected to be consumed in producing goods or services.

Direct Labour Hours

The total hours worked by employees directly involved in the production process of goods or delivery of services.

Machine Hours

A measure of production time, quantified in hours, that machinery is operational and actively working on manufacturing products.

Standard Costing System

A cost accounting method that assigns predetermined costs to production activities, facilitating variance analysis to control costs.