When gaining an understanding of the client's sources of financing, the auditor: a. is not interested in debt covenants because most debt contracts are the same. b. ignores the rel... When gaining an understanding of the client's sources of financing, the auditor: a. is not interested in debt covenants because most debt contracts are the same. b. ignores the relative reliance on debt versus equity funding because that is a management decision, not an audit issue. c. determines if the client is meeting principal and interest payments when they are due. d. determines if the client is writing off uncollectible accounts receivable.
Understand the Problem
The question is asking about the auditor's responsibilities when assessing a client's sources of financing. It provides four options regarding what the auditor does or does not focus on.
Answer
c. determines if the client is meeting principal and interest payments when they are due.
The final answer is c. determines if the client is meeting principal and interest payments when they are due.
Answer for screen readers
The final answer is c. determines if the client is meeting principal and interest payments when they are due.
More Information
Auditors assess if the client is meeting principal and interest obligations to evaluate the client's financial health and ability to meet financial commitments.
Sources
- Exam 1 Practice - Auditing notes - studocu.com
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