An Auditor Knew That the Purpose of Her Audit Was

question 57

Multiple Choice

An auditor knew that the purpose of her audit was to render reasonable assurance on financial statements that were to be used for the application for a loan;the auditor did not know the identity of the bank that would eventually give the loan.Under the foreseeable third party approach,the auditor is generally liable to the bank which subsequently grants the loan for:

• A)Lack of due diligence.
• B)Lack of good faith.
• C)Gross negligence,but not ordinary negligence.
• D)Either ordinary or gross negligence.

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Definitions:

Discrepancy Production

The generation of a difference or inconsistency between actual performances or outcomes and the expected or desired ones.

Discrepancy Induction

A method used to motivate change by highlighting the difference between current outcomes and desired goals.

Discrepancy Function

The difference between existing and desired conditions, used to identify gaps in performance or outcomes that need addressing.

Observational Learning

Learning that occurs through observing the behavior of others and the outcomes of those behaviors.