When an Error or Exception Is Identified During Substantive Testing

question 27

Multiple Choice

When an error or exception is identified during substantive testing, the first response is to:

• A) qualify the audit report.
• B) understand why the error or exception has arisen.
• C) increase the sample size.
• D) report the error or exception to the audit committee.

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Definitions:

Dividends Per Share

The amount of dividend a company pays out to each shareholder for each share they own, indicating the dividend payout per individual share.

Net Income

The net earnings of a company resulting from subtracting all costs and taxes from its overall revenue.

Shares Outstanding

The total number of a company's shares that are owned by shareholders, including both public and private entities, available in the market.

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.