Which of the Following Is Least Likely to Represent a Material

question 7

Multiple Choice

Which of the following is least likely to represent a material weakness in internal control for Flynt Corporation?

• A)Flynt Corporation's computer systems were not working properly for two days; consequently, employees needed to do all reconciliations manually.
• B)Flynt Corporation's CFO was arrested last year for embezzling money from the entity.
• C)For the current year, the auditor found a material misstatement in Flynt's sales recognition that was undetected by the internal controls.
• D)Flynt's audit committee is deemed to be ineffective.

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Definitions:

Macroeconomic Events

Large-scale economic events that affect the economy on a national or global level, such as inflation, unemployment, or fiscal policies.

Unsystematic Risk

The segment of risk that is unique to a specific company or industry, also known as diversifiable risk, which can be mitigated through diversification.

Diversification

Spreading a portfolio over many investments to avoid excessive exposure to any one source of risk.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.