When Communicating Internal Control Related Matters Noted in an Audit

question 937

Multiple Choice

When communicating internal control related matters noted in an audit of a nonissuer, an auditor's report issued on significant deficiencies should indicate that:

• A) Errors or fraud may occur and not be detected because there are inherent limitations in any internal control.
• B) The issuance of an unqualified opinion on the financial statements may be dependent on corrective follow-up action.
• C) A material weakness exists when the deficiencies noted were not detected within a timely period by employees in the normal course of performing their assigned functions.
• D) The purpose of the audit was to report on the financial statements and not to provide assurance on internal control.

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Definitions:

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Distributorship

A business arrangement in which a manufacturer or supplier authorizes an entity to distribute its products.

Secret Formula

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