Which option correctly explains what the stakeholder theory represents?
a.
It represents the relationship between the owners and the directors where conflict of interest arises as the directors who control
the entity may not necessarily have the best interest of the owners at heart.
b.
An entity is expected to have moral values and social responsibilities as its activities influence all its stakeholders.
c. For an entity to continue to exist, it must exist in harmony with its stakeholders.
d. An entity has a responsibility to serve not only its owners but also its wider stakeholders.
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Question 2
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Which of the following options are correct in terms of audit evidence?
Note there could be more than one correct option.
a. Audit evidence is information used by the auditor in arriving at the conclusions on which the auditor’s opinion is based.
b.
Appropriateness of audit evidence is the measure of the quantity of audit evidence.
c. Sufficiency of audit evidence is the measure of the quality of audit evidence.
d. Audit evidence includes both information contained in the accounting records underlying the financial statements and other
information
The auditor has to draw on past experience when assessing judgements about the future and may assume that in the context of an
Dashboard / My courses / AUE2601-24-S2 / Welcome Message / Assessment 1
ongoing audit engagement at the same client “things generally stay the same”.
To which of the audit postulates does this statement refer?
a. Application of generally accepted accounting practice results in fair presentation
b. The financial statements submitted to the auditor for verification are free of collusive and other unusual irregularities
c. No necessary conflict of interest exists between the auditor and the management/ employees of the enterprise under audit
d. That which held true in the past will hold true in the future
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