An Auditor Identified a Material Weakness in Internal Control in December.The

question 31

Multiple Choice

An auditor identified a material weakness in internal control in December.The client was informed and the client corrected the material weakness shortly after year-end (December 31) ; the auditor agrees that the correction eliminates the material weakness as of January 31.The appropriate audit report on internal control under PCAOB standards on reporting on internal control is:

• A)Adverse.
• B)Unqualified.
• C)Unqualified with explanatory language relating to the material weakness.
• D)Qualified.

---

Definitions:

Allocative Efficiency

A state of the economy in which production represents consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a utility equal to the cost of producing it.

Productive Efficiency

A situation in which an economy or entity is operating in such a way that it cannot produce more of one good without producing less of another.

Creative Destruction

The process by which new innovations cause older technologies, companies, or products to become obsolete, driving economic growth through continuous renewal.

Dominant Firms

Companies that have a major portion of market share and can significantly influence market conditions and prices.