Which of the Following Statements Regarding Audit Findings Is True

question 54

Multiple Choice

Which of the following statements regarding audit findings is True?

• A) A significant deficiency is a deficiency in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
• B) A material weakness is a deficiency in internal control important enough to merit attention by those charged with governance.
• C) A deficiency exists when the design or operation of a control does not allow management or employees to prevent, or detect and correct misstatements on a timely basis.
• D) All of the given statements are True.

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Definitions:

Call Option

A contractual arrangement providing the holder with the privilege, yet not the compulsion, to acquire an asset such as a stock, bond, or commodity, at a predetermined price during a defined period.

Interest Rate

An interest rate is the percentage of principal charged by the lender for the use of its money, or the rate earned on deposited funds.

Futures Contracts

Legally binding arrangements to engage in the buying or selling of a designated financial asset or commodity at a price established in advance, to be executed at a designated future time.

Price Risk

This refers to the possibility of an investor experiencing losses due to changes in the market price of a security.