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Introduction: Audit firms are organizations that conduct audit engagements. An audit firm may have more than one auditor in the form of its partners. The audit engagements are signed by any partner of the firm.
To identify: Whether the given statement is true or false.
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Answer to Problem 1CYBK
The given statement is false.
Explanation of Solution
An audit firm conducts audit engagements of their clients and it is usually not likely to face litigation costs. Audit firms keep the documentation of each process of audit engagement and conclusions are drawn. The recording of sufficient documents and pieces of evidence reduced the risk of future litigations which is why the audit firm is not likely to see the litigation costs as the highest single cost. Hence, the given statement is false.
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Chapter 4 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
- Give two examples of nonfinancial measures of internal-business-process quality.arrow_forwardOutline the technical benefits of a conceptual framework. What problems could occur if accounting standards were set without a conceptual framework?arrow_forwardIn comparison to the external auditor, an internal auditor is more likely to be concerned with a. Accounting system b. Internal control system c. Legal compliance d. Cost Accountingarrow_forward
- What happens if a larger company uses multiple reports and multiple models/templates when the review and report data? What happens if there is a lack of consistency and uniformity within the reporting and analytical process?arrow_forwardPerformance audits usually include [two answers]a. Financial audits.b. Economy and efficiency audits.c. Compliance audits.d. Program auditsarrow_forwardGive two examples of nonnancial measures of internal-business-process quality.arrow_forward
- Identify risks for accounting systems that rely heavily on IT functions.arrow_forwardWhich of the following is NOT part of a firm’s Total Cost of Ownership for an information system? A. IT personnel costs B. Installation costs for hardware and software C. Real Estate (floor space), heating, and cooling costs of data centers, computer centers, and server farms D. System downtime costs E. Cost of (the firm’s) goods sold (CGS)arrow_forwardExplain how long-term contractual relationships with suppliers can reduce the acquisition cost of materials.arrow_forward
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- Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
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