Which of the Following Situations Would Lead a CPA to Conclude

question 58

Multiple Choice

Which of the following situations would lead a CPA to conclude that a potential audit engagement should not be accepted?

• A)There are significant related party transactions that management claims occurred in the ordinary course of business.
• B)Internal control activities requiring the segregation of duties are subject to management override.
• C)Management continues to employ an inefficient system of information technology to record financial transactions.
• D)It is unlikely that sufficient evidence is available to support an opinion on the financial statements.

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Definitions:

Monetary Policy Weapon

Tools used by central banks to control the supply of money in the economy, influencing interest rates and inflation.

Legal Reserve Requirement

The minimum amount of reserves that banks are required to hold against deposits, as mandated by central banks.

Excess Reserves

Funds that banks hold over and above the required minimum by the central bank to cover depositor withdrawals.

Open Market Operations

Actions undertaken by a central bank, such as buying or selling government securities, to control the money supply and interest rates.