According to Professional Audit Standards,how Might Auditors Gain an Understanding

question 49

Multiple Choice

According to professional audit standards,how might auditors gain an understanding of the nature of fraud that may occur in the client organization?

• A)Fraud training courses from actual corporate fraud ex-criminals.
• B)Conducting a brainstorming session with the members of the audit team.
• C)Circulating a survey to the client company employees for completion.
• D)Discussions with other audit firms.

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholders' equity.

Net Profit Margin

A financial metric that measures the percentage of profit generated from revenue after all expenses have been subtracted.

Gross Margin

The difference between revenue and cost of goods sold, which shows the profitability of a company's core activities.

Return On Total Assets

A financial ratio that measures a company's profitability relative to its total assets.