Management of Eva Industries, an Issuer as Defined Under the Sarbanes-Oxley

question 825

Multiple Choice

Management of Eva Industries, an issuer as defined under the Sarbanes-Oxley Act, believes it has eliminated a material weakness previously noted in its assessment of internal control, and has hired Henna and Company, CPAs, to attest to the improvements in internal control. Which of the following is true of this engagement?

• A) It is required by PCAOB standards.
• B) It is only required if Eva Industries elects to have an audit in accordance with PCAOB standards.
• C) Eva's management must provide a written report to accompany Henna and Company's report.
• D) It is required by generally accepted auditing standards.

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Definitions:

Net Book Value

The total value of a company's assets minus its liabilities and intangible assets, indicating the net worth of the company's tangible assets.

Consolidated Net Income

The combined net income of a parent company and its subsidiaries, factoring in the effects of intercompany transactions.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the net profits or losses of the investee.

Consolidation Worksheet Entries

Journal entries used in preparing consolidated financial statements, helping to adjust and eliminate internal transactions between parent and subsidiary entities.