It Is Important for the CPA to Consider the Competence

question 43

Multiple Choice

It is important for the CPA to consider the competence of the clients' personnel because their competence bears directly and importantly upon the:

• A) cost/benefit relationship of the system of internal control.
• B) achievement of the objectives of internal control.
• C) comparison of recorded accountability with assets.
• D) timing of the tests to be performed.

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Definitions:

Systems Design

The process of defining the architecture, components, modules, interfaces, and data for a system to satisfy specified requirements.

Cash Equivalents

Short-term, highly liquid investments that are easily convertible into known amounts of cash with original maturities of three months or less.

Highly Liquid

Describes assets that can be quickly and easily converted into cash with minimal impact on their value.

Vouchers

Documents that serve as evidence of a transaction and propose a future payment, detailing the conditions and amounts to be paid.