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:

Payroll Taxes

Taxes imposed on employers and employees, based on the wages the employer pays to the employees.

Hours

Units of time equal to 60 minutes, often used to measure work or billing time in various contexts.

Fair Labor Standards Act

A U.S. law that sets out various labor regulations regarding interstate commerce employment, including minimum wages, requirements for overtime pay, and limitations on child labor.