In Using the Work of a Specialist, an Auditor of a Nonissuer

question 736

Multiple Choice

In using the work of a specialist, an auditor of a nonissuer may refer to the specialist in the auditor's report if, as a result of the specialist's findings, the auditor:

• A) Becomes aware of conditions causing substantial doubt about the entity's ability to continue as a going concern.
• B) Desires to disclose the specialist's findings, which imply that a more thorough audit was performed.
• C) Is able to corroborate another specialist's earlier findings that were consistent with management's representations.
• D) Discovers significant deficiencies in the design of the entity's internal control that management does not correct.

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Definitions:

Continuous

A term describing processes or functions that proceed without interruption or cessation.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before any dividends can be distributed to common stockholders.

Cumulative Preferred Stock

A type of preferred stock that entitles the holder to receive dividends in arrears before common stockholders can receive any dividends.

Liability

Any financial obligation or debt that an entity is responsible for paying to another party.