In Evaluating the Extent to Which the External Auditor Can

question 40

Multiple Choice

In evaluating the extent to which the external auditor can rely on the work of the internal auditor,which of the following factors would the external auditor consider?

• A)The independence of the function from management.
• B)The design and comprehensiveness of the internal audit testing approach.
• C)The documentation of the internal audit testing.
• D)All would be considered.

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Definitions:

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, that borrowers pay to lenders over a specified period.

Money Supply

The sum of all financial resources in the form of cash and deposits in banks present within an economy at a given moment.

Federal Reserve Board

A central body of the Federal Reserve System, overseeing the nation's monetary policy and regulating banks.

Deposit Expansion Multiplier

The deposit expansion multiplier refers to the ratio of the amount of money banks can create in the form of checkable deposits to the amount of reserves they hold.