Which of the Following Events Occurring in the Year Under

question 530

Multiple Choice

Which of the following events occurring in the year under audit would most likely indicate that internal controls utilized in previous years may be inadequate in the year under audit?

• A) The entity announced that the internal audit function would be eliminated after the balance sheet date.
• B) The audit committee chairperson unexpectedly resigned during the year under audit.
• C) The chief financial officer waived approvals on all checks to one vendor to expedite payment.
• D) The frequency of accounts payable check runs was changed from biweekly to weekly.

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Definitions:

Assembly Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product more efficiently.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or the delivery of services.

Factory Supplies

Materials and items used in a factory that do not directly go into a finished product but are necessary for manufacturing processes.

Factory Overhead

All indirect costs associated with the manufacturing process, including but not limited to utilities, maintenance, and management salaries, excluding direct labor and materials.