In Understanding the Client's Control Activities at the Entity Level

question 93

Multiple Choice

In understanding the client's control activities at the entity level, consideration is given to factors such as

• A) the extent to which performance of control activities relies on IT.
• B) the extent to which controls included in the organization's policies are being applied.
• C) whether adequate safeguards are in place to prevent unauthorized access to or destruction of documents, records and assets.
• D) all of the above

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Definitions:

Financial Leverage

Utilizing debt to finance additional assets, aiming to increase returns to shareholders but also increasing risk.

ROE

A metric indicating how effectively a company uses shareholders' funds to generate profits.

Financial Leverage

The use of borrowing to increase the potential return of an investment.

Beta Coefficient

This is a measurement of the volatility of a stock or portfolio in comparison to the market as a whole.