Audit Reports Are an Insufficient Basis for Financing Decisions by a Diligent

question 12

Multiple Choice

Audit reports are an insufficient basis for financing decisions by a diligent financier because:

• A) the audit report is out of date by the time of publication.
• B) the auditor might be negligent.
• C) an inappropriate audit opinion might be issued as a result of not complying with auditing standards.
• D) an unqualified audit opinion might be issued when the financial statements are materially misstated.

---

Definitions:

Life Cycle

The series of changes in the life of an organism, including reproduction, growth, and eventually death.

Biennial

Plants or events occurring every two years, particularly in the context of plant growth cycles.

Monocot

A classification of flowering plants (angiosperms) characterized by seeds with a single embryonic leaf or cotyledon.

Secondary Tissues

Plant tissues that arise from secondary growth, including secondary xylem (wood) and phloem, contributing to increased thickness of stems and roots.