Key performance indicators used by a client to monitor its performance provide an auditor
insight into which accounts are potentially at risk of misstatement.

Question

Quizplus · Accepted Answer

Key performance indicators (KPIs) are metrics used by companies to track their progress towards achieving specific goals. By reviewing the KPIs used by a client, an auditor can gain insight into which accounts or areas of the business may be at risk for misstatement or fraud. For example, if a client is closely monitoring their accounts receivable turnover ratio and it suddenly decreases, it could be an indication of potential issues such as uncollectible accounts or fraudulent sales transactions. Therefore, understanding a client's KPIs is an important part of the audit planning process.

Key Performance Indicators Used by a Client to Monitor Its