If a Nonissuer Wants an Accountant to Perform an Examination

question 72

Multiple Choice

If a nonissuer wants an accountant to perform an examination of its internal controls,the accountant should follow

• A) PCAOB AS 5, "An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements."
• B) AICPA AT 501, "An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements."
• C) AICPA AU315, "Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement."
• D) FASB Concepts Statement No.1, "Objectives of Financial Reporting by Business Enterprises."

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Definitions:

Slippery Slope Fallacy

A logical fallacy in which a relatively small first step leads to a chain of related events culminating in some significant effect, much like sliding down a slippery slope.

Gambler's Fallacy

A logical fallacy in which one assumes that future probabilities are altered by past events, often seen in gambling when assuming a certain outcome is "due".

Sunk Cost Fallacy

The misconception of valuing a project or investment based on the amount of resources already invested, rather than the prospective future returns.

Argumentum Ad Hominem

A logical fallacy that occurs when an argument is rebutted by attacking the character, motive, or other attribute of the person making the argument, rather than addressing the substance of the argument itself.