An Auditor Obtains Knowledge About a New Client's Business and Its

question 1

Multiple Choice

An auditor obtains knowledge about a new client's business and its industry in order to

• A) Make constructive suggestions concerning improvements to the client's internal control.
• B) Develop an attitude of professional skepticism concerning management's financial statement assertions.
• C) Evaluate whether the aggregation of known misstatements causes the financial statements taken as a whole to be materially misstated.
• D) Understand the events and transactions that may have an effect on the client's financial statements.

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Definitions:

Similar Manner

Refers to actions or processes that are alike or nearly identical in method or execution.

Different Stimuli

Refer to various external or internal factors that can elicit responses from an organism or a system.

Ratio Strain

A breakdown in the performance of learned behaviors that occurs when reinforcement schedules are thinned too quickly.

Reinforcement

A process which increases the likelihood of a behavior by applying a stimulus immediately after the behavior occurs.