Which of the Following Statements Is Correct Concerning an Auditor's

question 3

Multiple Choice

Which of the following statements is correct concerning an auditor's required communication of significant deficiencies in internal control noted during an audit of a nonissuer?

• A) A significant deficiency previously communicated during the prior year's audit that remains uncorrected causes a scope limitation.
• B) An auditor should perform tests of controls on significant deficiencies before communicating them to the client.
• C) An auditor's report on significant deficiencies should include a restriction on the distribution of the report.
• D) An auditor should communicate significant deficiencies after tests of controls, but before commencing substantive tests.

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Definitions:

Assignment Of Book Debts

The transfer of the right to collect debts owed to a business, typically to secure a loan or as part of a financial arrangement.

Crystallization

The process in which a solid forms, where atoms or molecules are highly structured in a pattern extending in all three spatial dimensions.

Corporate Financing

The process of providing funds for business activities, making investments, and managing financial risks.

Conditional Sales Agreement

A contract agreement where the sale of goods is conditional upon certain terms, with the ownership title remaining with the seller until those conditions are met.