The Auditing Standards Presume That the Auditor Will Request Confirmation

question 88

Multiple Choice

The auditing standards presume that the auditor will request confirmation of the accounts receivable balances unless

• A)the balance in accounts receivable is immaterial
• B)the use of confirmations would be effective if the amounts were significant
• C)the auditor can reduce the risk of issuing an audit opinion to an acceptable low level without confirming accounts receivable
• D)the client believes that confirmations are not necessary

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Definitions:

Multicollinearity

A statistical phenomenon where two or more predictor variables in a multiple regression model are highly correlated, potentially distorting estimates.

Correlation Coefficient

The correlation coefficient is a statistical measure that calculates the strength and direction of the relationship between two variables, ranging from -1 to 1.

Variance Inflation Factor

A measure of how much the variance of an estimated regression coefficient increases if your predictors are correlated.

Independent Variables

Factors within an experiment or model that are intentionally altered to study their impact on outcome variables.