Which of the Following Auditor Concerns Most Likely Could Be

question 49

Multiple Choice

Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?

• A)The entity has no formal written code of conduct.
• B)The integrity of entity's management is suspect.
• C)Procedures requiring separation of duties are subject to management override.
• D)Management fails to modify prescribed controls for changes in conditions.

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Definitions:

Accounting-based Incentive Plans

Compensation plans that reward employees based on meeting certain accounting metrics, such as earnings per share or return on assets.

Long-term Business Focus

A strategic approach that prioritizes sustainable growth, investments, and operational decisions that benefit a company in the long run rather than focusing on short-term gains.

Unwanted Attention

Undesirable focus or notice from others, often causing discomfort or distress.

Accounting Methods

Accounting methods refer to the rules a company follows in reporting revenues and expenses in its financial statements. The two main types of accounting methods are accrual basis and cash basis.