If Auditors Identify Risk Factors That Indicate That the Going

question 15

Multiple Choice

If auditors identify risk factors that indicate that the going concern assumption is in doubt, they will:

• A) Undertake procedures to gather evidence regarding each risk factor
• B) Refuse to continue as the auditor of their client
• C) Report the client to the Australian Taxation Office
• D) Reduce the extent of further audit testing that they undertake

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Definitions:

Book Depreciation

The depreciation of an asset recorded in the financial statements of a business, calculated using the chosen depreciation method.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary depending on income level, type of tax, or jurisdiction.

Deferred Tax

A tax obligation that a company owes in the future due to timing differences between its taxable income and its accounting earnings.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded, representing liabilities for services or goods received.