DEFICIENCY Definition

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DEFICIENCY is a shortcoming in an internal control or an opportunity to strengthen internal controls.

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INTEGRITY is consistent adherence to an ethical code. If client management lacks integrity the auditor must be more skeptical than usual.

CONTRIBUTION/SALES RATIO (C/S RATIO) is a tool used in profit management. It is important to establish the C/S RATIO: C/S ratio = (Sales revenue - Variable cost of sales)/Sales revenue x 100. If a company achieves a high average marginal profit ratio of say, 40%, it does not mean that it will achieve high profits. The eventual profit will be dependent on the level of fixed costs within the organization.

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