Due Professional Care, the Third General Standard, Is Concerned with What

question 40

Multiple Choice

Due professional care, the third general standard, is concerned with what is done by the independent auditor and how well it is done. For example, due care in the matter of audit documentation requires that audit documentation of the evidence gathered by the auditor meets which of the following criteria?

• A) Workpapers be indexed to the general ledger accounts and include both a permanent file and a general file.
• B) The content be sufficient to provide support for the auditor's opinion, including the auditor's representation as to compliance with auditing standards.
• C) Audit evidence is principally gathered to determine if the client's financial statements, as prepared by management, can be relied upon to make managerial decisions about the firm.
• D) Audit evidence as displayed in the workpapers is primarily performed to protect the auditing firm in the case of a lawsuit by investors.

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Definitions:

Indicator Variable

A variable, usually binary, used to represent the presence or absence of a categorical effect in regression models.

Groceries

Consumer goods, especially food and household items, sold by a grocer.

Log Odds

The logarithm of the odds ratio, used in logistic regression to describe the relationship between a binary dependent variable and one or more independent variables.

Mammogram

A radiographic examination of the breasts to screen for and diagnose breast cancer.