Hickory Company, Whose Financial Statements Are Unaudited, Has Engaged an Auditor

question 15

Multiple Choice

Hickory Company, whose financial statements are unaudited, has engaged an auditor to make a special review and report on Hickory's internal accounting control. In general, to which of the following will this report be LEAST useful?

• A) A regulatory agency having jurisdiction over Hickory
• B) Present and prospective customers
• C) Hickory's management
• D) The independent auditor of Hickory's parent company

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Definitions:

Directors' Declaration

A statement by the company's directors asserting the accuracy of the financial statements.

Auditor's Report

A formal opinion issued by an auditor based on an audit of a company's financial statements, indicating whether the statements are free from material misstatement and accurately represent the company's financial position.

Financial Statements

A comprehensive set of reports including the balance sheet, income statement, cash flow statement, and statement of changes in equity, that together provide an overview of a company's financial position and performance.

Retrospective Restatement

A correction of the recognition, measurement, and disclosure of amounts of elements of financial statements as if a prior period error had never occurred.