Why Is It the Client's Decision to Record Adjustments to the Financial

question 54

Multiple Choice

Why is it the client's decision to record adjustments to the financial statements?

• A)Having auditors adjust the financial statements would impair independence with respect to the client.
• B)The financial statements are the responsibility of the client's management.
• C)Auditors often do not have sufficient client-specific expertise to record adjustments to the financial statements.
• D)The client will ultimately suffer any losses related to misstated financial statements.

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Definitions:

Debtor

An individual or entity that owes money to another; the borrower in a financial transaction.

Liable

Legally responsible or obligated to something, especially to make restitution or compensation.

Secured Party

An individual or organization holding an interest in a debtor's property as collateral for a loan.

Confirmation

The process of verifying or validating an arrangement or transaction, often documented in writing.