In Researching a Potential New Audit Client,you Determine That the Business

question 31

Multiple Choice

In researching a potential new audit client,you determine that the business operates in a highly competitive industry,with low barriers to entry and very short product life cycles.What audit planning factors will this information help you to assess?

• A)Audit risk
• B)Auditor's risk from taking the engagement.
• C)Client business risk
• D)An acceptable level of Information risk.

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Definitions:

Privity of Contract

A doctrine in contract law that prohibits any person who is not a party to a contract from enforcing or being bound by the terms of that contract.

Legally Enforce

The capability to impose compliance or execution of a law, agreement, or obligation through legal processes or judicial intervention.

Assignee

A person to whom an assignment is made.

Obligor

In contract law, the party who is obligated to deliver on a promise or to undertake some act.