The Use of Variable Interest Entities Increase Inherent Risks

question 28

Multiple Choice

The use of variable interest entities increase inherent risks:

• A) with respect to presentation and disclosure of shareholders' equity.
• B) when they are included in the client's consolidated financial statements
• C) except when authorized by the board of directors.
• D) as to the completeness assertions for investing and financing.
• E) with respect to the rights and obligations assertions for shareholders' equity.

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Definitions:

Convergence Efforts

Initiatives aimed at eliminating differences between various accounting standards (like between IFRS and GAAP) to achieve global consistency.

Ethical Dilemma

A situation in which choosing between two or more morally conflicting courses of action is difficult because there are competing ethical principles or values at play.

Ethical Criteria

Standards or principles used to judge the rightness or wrongness of actions, often based in moral philosophy.

Accounting Majors

Students specializing in the study of accounting, preparing for careers in financial reporting, auditing, tax, and more.