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Why Are External Auditors Interested in Risk Management

question 27

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Why are external auditors interested in risk management?


Definitions:

Economic Profit

Profit calculated by subtracting both explicit (direct) and implicit (indirect or opportunity) costs from total revenues.

Economic Profit

The profit a company makes after deducting both explicit (direct payments) and implicit (opportunity) costs.

Normal Profit

Normal profit is the minimum level of profit needed for a company to remain competitive in the market, equivalent to the opportunity cost of capital.

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