When an Auditor Agrees to Perform an Audit Because the Preconditions

question 62

Multiple Choice

When an auditor agrees to perform an audit because the preconditions for an audit have been met and the auditor believes that he can gather sufficient appropriate audit evidence to reduce audit risk to an acceptably low level,an engagement letter is prepared.The engagement letter includes:

• A)the purpose of the audit (to express an opinion on particular financial statements).
• B)management's assistance (to prepare the financial statements,select accounting policies,establish effective internal controls,design programs to prevent and detect fraud,provide written representation,inform the auditor of subsequent events that may affect the financial statements,and make all financial records and information available to the auditor).
• C)the auditor's responsibilities (to conduct the audit in accordance with generally accepted auditing standards and obtain an understanding of the client's internal control).
• D)the internal control limitations of an audit engagement (material misstatements may not be detected).

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Definitions:

Make-Or-Buy Decision

A strategic decision that businesses use to determine whether they should produce an item internally or buy it from an external supplier.

Supplier Relationships

The interactions and partnerships formed between a buying company and its suppliers, crucial for ensuring supply chain efficiency and resilience.

Services On Demand

The delivery of services exactly when they are needed or requested by customers, often facilitated by technology and the digital economy.

E-Purchasing

The process of buying goods and services via electronic means, particularly through the internet, for businesses or personal use.