Which of the Following Best Describes an Engagement to Report

question 49

Multiple Choice

Which of the following best describes an engagement to report on an entity's internal control over financial reporting for a nonpublic company?

• A)An attestation engagement to examine and report on management's written assertions about the effectiveness of its internal control structure
• B)An audit engagement to render an opinion on the entity's internal control structure
• C)A prospective engagement to project,for a period of time not to exceed one year,and report on the expected benefits of the entity's internal control structure
• D)A consulting engagement to provide constructive advice to the entity on its internal control structure

---

Definitions:

Common Size Analysis

A financial analysis technique that converts each line item of financial statements into a percentage of a base figure for easy comparison.

Base Amount

A reference amount from which adjustments are made, often used in calculations for taxes, benefits, or financial analysis.

Horizontal Analysis

A financial analysis technique that compares line items in the financial statements over a period of time to identify trends and changes.

Liquidity Ratio

A financial metric used to determine how easily a company can pay off its short-term liabilities with its liquid assets.