Which of the Following Is Not True

question 28

Multiple Choice

Which of the following is not true?

• A)The auditor should not communicate with management until the audit of internal control over financial reporting is finished.
• B)Written communication between the auditor and management about internal control over financial reporting should include the definitions of control deficiencies, significant deficiencies, and material weaknesses.
• C)The auditor should not include in the audit report that no significant deficiencies were noted during an audit of internal control over financial reporting.
• D)If fraud is discovered, the auditor must report it to the appropriate level of management.

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Definitions:

Direct Method

A way to present the cash flow from operating activities by listing major operating cash receipts and payments, making it easier to understand than the indirect method.

Operating Activities

Day-to-day actions that relate directly to the production, sale, and delivery of a company’s products and services.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions, deferred incomes, and the change in working capital.