Why Must Auditors Gain an Understanding of Their Client at the Start

question 21

Essay

Why must auditors gain an understanding of their client at the start of every audit?

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Definitions:

Dividend Growth

The annual rate at which a company's dividends per share increase over time, indicating its ability to consistently raise dividend payments.

EPS Growth Rate

The annual rate at which a company's earnings per share (EPS) has grown or is projected to grow.

Rate of Return

The profit or deficit experienced by an investment over a certain period, represented as a percentage of the investment's initial cost.

EPS

A rephrased definition: The portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company’s financial health.