Management of a Publicly-Held Organization Requires the Internal Audit Activity

question 101

Multiple Choice

Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?

• A) Management may be concerned about its reputation in the financial markets.
• B) Management is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.
• C) Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.
• D) Management may perceive that having quarterly financial information examined by the internal auditors enhances the information's value to internal decision making.

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Definitions:

Ambiguous Language

Phrases or terms in a document or communication that are unclear or have multiple interpretations, often leading to confusion or misunderstandings.

Assignment

The transfer of rights or property from one party to another.

Duties

Obligations or tasks that an individual is required or expected to perform.

Rights

Freedoms or entitlements that individuals are guaranteed by law or social agreement.