Which of the Following Will an Auditor Most Likely Discuss

question 67

Multiple Choice

Which of the following will an auditor most likely discuss with the former auditors of a potential client prior to acceptance?

• A)Integrity of management.
• B)Reasons for changing audit firms.
• C)Disagreements with management regarding accounting principles.
• D)All of the above must be discussed.

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Definitions:

Price Standard

A pre-determined cost per unit of input or output, used for setting budgets and measuring performance.

Variable Overhead Efficiency Variance

Variable overhead efficiency variance is a metric used to measure the difference between the expected (standard) and actual use of variable overhead resources in production.

Standard Machine-Hours

A predetermined measure of how much machine time is expected for a task, used in cost accounting.

Variable Overhead Rate Variance

The difference between the actual variable overhead rate incurred and the standard rate, multiplied by the actual activity level.