Fleming and Co

question 28

Multiple Choice

Fleming and Co. ,CPAs,issued an unqualified opinion on the 20X3 financial statements of Walton Corp.Late in 20X4,Walton determined that its controller had embezzled over $2,000,000.Fleming was unaware of the embezzlement.Walton has decided to sue Fleming to recover the $2,000,000.Waltons suit is based upon Fleming's failure to discover the missing money while performing the audit.Which of the following is Fleming's best defense?

• A)That the audit was performed in accordance with GAAS.
• B)Fleming had no knowledge of the embezzlement.
• C)The financial statements were presented in conformity with GAAP.
• D)The controller was Walton's agent and as such had designed the controls which facilitated the embezzlement.

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Definitions:

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