When Planning the Audit, If the Auditor Has No Reason

question 65

Multiple Choice

When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should:

• A)include audit procedures which have a strong probability of detecting illegal acts.
• B)still include some audit procedures designed specifically to uncover illegalities.
• C)ignore the issue.
• D)make inquiries of management regarding their policies for detecting and preventing illegal acts and regarding their knowledge of violations, and then rely on normal audit procedures to detect errors, irregularities, and illegalities.

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Definitions:

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Yearly Interest Expense

The total amount of interest payment a company owes over the course of a year on its borrowings.

Total Interest Expense

The total cost incurred by an entity for borrowed funds over a specific period.

Total Discount

The complete reduction in price applied to a product or service, which could include various forms of discounts such as trade, quantity, or promotional discounts.