Which of the Following Statements Is True About an Auditor's

question 14

Multiple Choice

Which of the following statements is true about an auditor's responsibility to communicate with respect to a public company's internal controls?

• A) The auditor will issue an adverse report on the effectiveness of internal controls if a material weakness in internal controls over financial reporting exists.
• B) Auditors are required to communicate all significant deficiencies in internal control to management but not necessarily to the audit committee.
• C) Auditors are required to communicate all significant deficiencies in internal control to the audit committee but not necessarily to management.
• D) The difference between a material weakness and a significant deficiency is inconsequential.
• E) The auditor's judgment is based on either the likelihood of the misstatement or on the potential magnitude of the misstatement.

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Definitions:

Competitiveness

The ability of a company, sector, or economy to provide products or services effectively in comparison to others, often measured by factors like cost, quality, and innovation.

Union Contracts

Agreements negotiated by labor unions and employers defining employment terms, worker benefits, and conditions to ensure fair treatment and equitable wages for union members.

Legally Enforceable

Terms or agreements that can be upheld and imposed by law or in court.

Employees and Employers

The relationship between individuals who provide labor (employees) and those who provide compensation for this labor within an organized work environment (employers).