During the Audit of the Quality Control Area,an Auditor Identified

question 10

Multiple Choice

During the audit of the quality control area,an auditor identified that a specific product has a 3 percent failure rate when tested.The specification calls for a failure rate of less than 1.8 percent.Product failure might lead to customer injury and in turn lawsuits against the company.The auditor has communicated this to management.Which of the following is not an acceptable response from management with regard to this risk?

• A)Management is aware of the risk and has decided that it is acceptable.
• B)Management has decided not to continue manufacturing this product.
• C)Management has decided to increase the quality control activity to reduce the manufacture of unacceptable product to an acceptably low level.
• D)Management has decided that the test data are unreliable and has decided not to respond to the audit findings.

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Definitions:

Nature of Account

This describes the fundamental characteristics and purpose of an account in accounting, such as whether it's an asset, liability, revenue, expense, or equity account.

Journalize

The act of recording financial transactions in a company's journal, a step in the accounting process.

Withdraws

The action of taking money out of an account, or removing capital from a business by its owners.

Personal Use

Personal use refers to the utilization of property, assets, or services for individual rather than business or commercial purposes.