Your Client Has Experienced a Major Data Breach with Lawsuits

question 34

Multiple Choice

Your client has experienced a major data breach with lawsuits and fines pending of significant and uncertain amounts. These events are disclosed in the client's financial statements and are clearly explained in the notes. How do these events affect the independent auditor's report?

• A) The auditor would use a standard unqualified auditor's report.
• B) The auditor would use an emphasis of matter paragraph titled "Data Breach" to highlight the events.
• C) The auditor would use an "other matters" paragraph titled "Data Breach" to highlight the amounts.
• D) The auditor would use a qualified audit opinion due to the size of the uncertainty.

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Definitions:

Repetitive Focus

A manufacturing strategy where the same products or services are produced repetitively over a period, aiming for efficiency and consistency.

Cross-Over Point

The point where two different plans, strategies, or costs meet and produce the same outcome or value.

Variable Cost

Expenses that fluctuate in relation to the volume of output or business activity. A reiteration that emphasizes the dependency on production levels.

Outsource Production

The practice of delegating production or manufacturing processes to external firms, often to reduce costs or access specialized skills.