A Client Has Omitted a Significant Disclosure from the Financial

question 27

Multiple Choice

A client has omitted a significant disclosure from the financial statements.The auditor has asked the client to include the information,but the client refuses and claims the information is confidential.The position of the CPA should be that the information

• A) Cannot be considered confidential if it is necessary to the completeness of the financial statements.
• B) Cannot be considered confidential unless it can be covered by the attorney-client privilege.
• C) Is confidential and will be disclosed only under subpoena or for a regulatory investigation.
• D) Should be discussed with the audit committee to determine whether the information should be disclosed.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, effectively the value of the opportunity lost.

Import Commodities

Goods or services brought into one country from another for the purpose of trade.

Economic Organization

Structured arrangements within an economy that determine how resources are allocated, goods are produced, and services are distributed.

Socialism

A system of economic organization in which (1) the ownership and control of the basic means of production rest with the state and (2) resource allocation is determined by centralized planning rather than by market forces.