In Order for an External Auditor to Complete an Audit

question 20

Multiple Choice

In order for an external auditor to complete an audit of a public company, the entity's management must comply with all of the following except:

• A)accept responsibility for the effectiveness of the entity's internal control over financial reporting.
• B)evaluate the effectiveness of the entity's internal control over financial reporting using suitable control criteria.
• C)support its evaluation with sufficient evidence, including documentation.
• D)present an oral assessment of the effectiveness of the entity's internal control over financial reporting as of the end of the entity's most recent fiscal year.

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Definitions:

Inventory

The totality of goods or materials a company holds for the purpose of selling in the market or using in production.

Fixed Assets

Assets that are of a permanent or long-term nature, typically used in the operations of a business, such as buildings, machinery, and equipment.

Full Capacity

The maximum level of output that a company can sustain within a given period, utilizing all available resources efficiently.

Fixed Assets

Long-term tangible assets, such as buildings and machinery, used in the operations of a business that are not expected to be converted into cash within a year.