Which of the Following Statements, If True, Could Justify an Auditor's

question 378

Multiple Choice

Which of the following statements, if true, could justify an auditor's decision not to report governance-related control deficiencies to the audit committee?

• A) Management plans to initiate corrective action.
• B) The board of directors has a separate corporate governance committee.
• C) The amounts and the potential risks associated with the deficiencies are not material to the overall organization.
• D) Governance issues are complex and the auditor should rely on management's analysis of the extent of the problem.

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Definitions:

Charter of Rights

A formal document outlining the fundamental rights and freedoms guaranteed to individuals, usually established by a governing body.

Constitution

A set of fundamental principles or established precedents according to which a state or other organization is governed.

Liberal Democracy

A political ideology and form of government characterized by fair, free, and competitive elections, along with the protection of civil liberties.

Formal Democracy

A system of government where official, structured, and institutionalized procedures are followed to elect representatives and make policy decisions.