When a Statement Auditing Standards Uses the Word "Should" Relating

question 33

Multiple Choice

When a Statement Auditing Standards uses the word "should" relating to a requirement,it means that the auditor:

• A)Should fulfill the responsibilities under all circumstances.
• B)Should comply with requirements unless the auditor demonstrates and documents that alternative actions are sufficient to achieve the objectives of the standards.
• C)Should consider whether to follow the advice based on the exercise of professional judgment in the circumstances.
• D)May choose to change responsibilities relating to various professional standards that remain under consideration.

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Definitions:

Portfolio

A range of investments held by a person or organization, diversified across asset classes, instruments, or sectors, to manage risk and return.

CAPM

Capital Asset Pricing Model; a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Expected Return

The expected profit from an investment, calculated by considering the likelihood of various potential results.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 means the stock is more volatile than the market, while a beta below 1 means it is less volatile.