In Which of the Following Circumstances Is an Auditor Most

question 35

Multiple Choice

In which of the following circumstances is an auditor most likely to express an adverse opinion?

• A)The chief executive officer refuses the auditor access to minutes of board of directors' meetings.
• B)Tests of controls show that the entity's internal control system is so poor that it cannot be relied upon.
• C)The financial statements are not in accordance with the CICA Handbook regarding the capitalization of leases.
• D)Information comes to the auditor's attention that raises substantial doubt about the entity's ability to continue as a going concern.

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Definitions:

Franchise Fees

Payments made by franchisees to franchisors, typically in exchange for the right to use the franchisor's business model and branding.

Nonexcludable

describes a good or service that cannot be withheld from individuals who do not pay for it, characteristic of public goods.

Free Riders

Individuals who benefit from resources, goods, or services without paying for them, relying on others to bear the cost.

Private Firm

A business owned by private individuals or groups, not controlled by the government, and operated for profit.