An Auditor Has Been Engaged to Report on Management's Report

question 21

Multiple Choice

An auditor has been engaged to report on management's report on internal control.Management's report points to a material weakness in its system of internal controls over inventory.The auditor's report should be:

• A)An adverse opinion.
• B)A qualified opinion for a GAAP departure.
• C)A clean opinion.
• D)A clean opinion with an emphasis of matter paragraph.

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Definitions:

Account Segmentation

The process of dividing a company's customer accounts into distinct groups based on criteria such as size, needs, or behavior to tailor marketing and sales approaches.

Territory Management

The process of managing sales or business operations within a specific geographical area to maximize efficiency and productivity.

80/20 Principle

A rule suggesting that 80% of outcomes result from 20% of all causes for any given event.

Key Accounts

Large, significant customers that contribute a substantial portion of a company's revenue.