GAGAS Requires Auditors to Report Deficiencies in Internal Control That

question 39

Multiple Choice

GAGAS requires auditors to report deficiencies in internal control that they consider to be reportable conditions. Examples of such reportable conditions include all of the following except:

• A) absence of appropriate segregation of duties consistent with appropriate control objectives.
• B) evidence of failure to safeguard assets from loss, damage, or misappropriation.
• C) absence of a sufficient level of control consciousness within the organization.
• D) failure to follow-up and correct previously identified deficiencies in internal control.
• E) absence of an efficient use of audit resources.

---

Definitions:

Security Market Line

A representation in the Capital Asset Pricing Model (CAPM) that displays the risk versus expected return of the market at any given time.

Beta Coefficient

A measure of a stock's volatility or risk relative to the overall market.

Market Risk Premium

The extra return expected by investors for holding a risky market portfolio instead of risk-free securities.

Risk-free Interest Rate

The theoretical return on investment with zero risk of financial loss, typically associated with government bonds.