If Auditors Identify Risk Factors That Indicate That the Going

question 38

Multiple Choice

If auditors identify risk factors that indicate that the going concern assumption is in doubt,they will:

• A)Refuse to continue as the auditor of their client.
• B)Report the client to the Australian Taxation Office.
• C)Reduce the extent of further audit testing that they undertake.
• D)Undertake procedures to gather evidence regarding each risk factor.

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Definitions:

Mortgage

A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Deed of Trust

A legal document used in some states that involves three parties—the borrower, the lender, and the trustee—and it serves as a lien on real property.

Default

The failure to fulfill a legal obligation, especially the failure to pay back a loan according to the agreed-upon terms.

Beneficiary

An individual or entity entitled to receive benefits or assets under a legal instrument, such as a will, trust, or insurance policy.