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:

Liquidity

The ease with which assets can be converted into cash without significantly affecting their value, often essential for meeting short-term financial obligations.

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment, or in business, the use of various techniques to maximize outcomes.

Ability to Generate Cash

The capacity of a business to convert activities or assets into liquid funds to meet short-term obligations and support operations.

Financial Strength

A term that refers to the financial stability and health of an organization, often assessed through metrics such as liquidity, solvency, and profitability.