If an Auditor Suspects Management Is Overriding Controls Relating to the Closing

question 85

Multiple Choice

If an auditor suspects management is overriding controls relating to the closing process, the auditor should _________.

• A)extend audit procedures to carefully check adjusting and allocating entries that are prepared at the end of the period
• B)extend audit procedures to check all balance sheet accounts
• C)obtain management's written representation in lieu of further audit procedures
• D)make these audit procedures the focus of the audit engagement

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Definitions:

Par Value Common Stock

The nominal or face value assigned to shares of common stock in the corporate charter, which has little relation to the market value of the shares.

Paid-in Capital

Funds received from investors during equity issuances, contributing to a company's equity beyond the initial stock value.

Cash Price

The amount of money that a buyer pays to purchase a good or service when paying in cash instead of using credit or financing.

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's underlying value.