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:

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that categorizes human needs into five hierarchical levels, from basic physiological needs to self-actualization.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that outlines a five-tier model of human needs, from basic (physiological) to more complex (self-actualization) needs.

Assumptions

Beliefs or ideas taken for granted without any proof or surety, often used as bases for reasoning and decision-making.

Motivation Theory

A concept that explains what drives individuals to initiate, direct, and sustain behaviors to satisfy their needs and goals.