The Documentation of an Auditor's Understanding of Internal Controls

question 45

Multiple Choice

The documentation of an auditor's understanding of internal controls

• A) Is optional.
• B) Must be exclusively in either narrative, questionnaire, or flowchart form.
• C) Must include flowcharts.
• D) Can include any combination of narratives, questionnaire, or flowcharts.

---

Definitions:

Interest Expense

The cost incurred by an entity for borrowing funds, typically reported on the income statement.

Basic EPS

A measure of a company's performance that divides earnings available to common shareholders by the average number of common shares outstanding.

Diluted EPS

A performance metric that calculates a company's earnings per share (EPS) assuming all convertible securities were converted to common stock.

Treasury Stock

Shares bought back by the issuing company, reducing the amount of outstanding stock on the open market.