You Are Performing the Audit of Internal Control for Clifton

question 53

Multiple Choice

You are performing the audit of internal control for Clifton Company. Which of the following would represent a material weakness in internal control?

• A) The company's audit committee has experienced an unusual turnover of members.
• B) The company's CFO was indicted for embezzling from the company.
• C) Bank reconciliations are done monthly.
• D) The CEO retired after twenty years of service to the company.

Understand the classification and recognition of liabilities on the balance sheet.

Acknowledge the importance of internal controls in managing cash payments and payroll.

Learn the reporting requirements and documentation for payroll and payroll taxes.

Understand the concept and implications of federal unemployment compensation tax.

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Definitions:

Sensory Adaptation

The adaptation process of sensory receptors becoming duller in response to stimuli that stays the same over time.

Stimulus Generalization

The process by which a response originally elicited by a specific stimulus is elicited by similar stimuli.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period of no exposure to the conditioned stimulus.

Instinctive Drift

The phenomenon whereby an animal's learned behavior reverts to its natural instincts over time, often interfering with conditioned response training.