When Substantive Tests Performed Identify Errors or Exceptions, the Auditor's

question 32

Multiple Choice

When substantive tests performed identify errors or exceptions, the auditor's first response is to:

• A) qualify the audit report.
• B) report the client to ASIC.
• C) understand why the exception or error has arisen.
• D) None of the above

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Definitions:

Producer Surplus

The contrast between what is an acceptable amount for producers for a good or service and the actual amount they are paid.

Marginal Cost

The extra expenditure linked to producing one more unit of a product or service.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Overproduction

The condition where production exceeds the demand, leading to surplus inventory, lower prices, and potential economic inefficiencies.