A Client Has Omitted a Significant Disclosure from the Financial

question 26

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 only be disclosed under subpoena or for a regulatory investigation.
• D)Should be discussed with the audit committee to determine if the information should be disclosed.

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Definitions:

Net Present Value

A calculation that compares the present value of cash inflows with the present value of cash outflows over a period of time.

Working Capital

The difference between a company's current assets and current liabilities, indicating its ability to meet short-term obligations.

Discount Rate

A discount rate utilized in discounted cash flow assessment for establishing the present worth of expected cash flows.

Annual Operating Cash Inflows

Annual operating cash inflows are the monetary returns received from a company's day-to-day business operations over the course of a year.