In an Audit Report on the Effectiveness of ICFR for a Public

question 14

Multiple Choice

In an audit report on the effectiveness of ICFR for a public company, what does the scope paragraph explain?

• A)The auditors conducted their audit in accordance with the standards of the PCAOB.
• B)An internal control system does not eliminate all risk associated with the preparation of financial statements.
• C)A material misstatement of the financial statements will not be prevented or detected on a timely basis.
• D)Circumstances may change in the future and render controls ineffective if the controls are not modified appropriately.

---

Definitions:

Distributive Negotiation

Win–lose negotiation in which a fixed number of assets is divided between parties.

Competition

The activity or condition of striving to gain superiority over others in the same field or market.

Collaboration

Working together with one or more individuals or groups to achieve a common goal or complete a task.

Distributive Negotiation

A negotiation strategy that views the resources being negotiated as fixed and limited, leading to a win-lose scenario between the parties.