Which of the Following Best Describes the Responsibility of the Auditor

question 171

Multiple Choice

Which of the following best describes the responsibility of the auditor to report significant deficiencies and material weaknesses in an attest engagement to examine the effectiveness of a nonissuer's internal control?

• A) The auditor must communicate both significant deficiencies and material weaknesses.
• B) The auditor must communicate material weaknesses, but need not disclose significant deficiencies.
• C) The auditor must communicate significant deficiencies, but need not separately identify material weaknesses.
• D) Neither significant deficiencies nor material weaknesses are required to be communicated.

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Definitions:

Intangible Assets

Intangible assets are non-physical but valuable assets such as intellectual property, brand recognition, and patents, which contribute to a company's value.

Physical Substance

The material or tangible component of an asset, as opposed to intangible assets like patents or copyrights.

Trade-In Allowance

The amount credited to the buyer by the seller for a product being traded in towards the purchase of a new product.

Book Value

Book value is the net value of a company's assets as recorded on the balance sheet, calculated by subtracting liabilities from the total value of assets.