The Existence of a Material Weakness Led to an Adverse

question 2

Multiple Choice

The existence of a material weakness led to an adverse opinion in the internal control audit report of a publicly traded company.Which of the following statements is correct if management believes that it has remediated the weakness?

• A)Management may engage the auditors to report on whether the material weakness continues to exist prior to its next annual audit.
• B)Management is required to engage the auditors to report on whether the material weakness continues to exist prior to its next annual audit.
• C)Management may not engage the auditors to report on whether the material weakness continues to exist prior to its next annual audit.
• D)Management may engage the auditors to modify the prior adverse audit report be modified to an unqualified report.

---

Definitions:

Resource Structure

The composition and allocation of resources within an organization or economy, including human, financial, and material resources.

Financial Structure

The mix of debt and equity that a company uses to finance its operations and growth.

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of an entity after deducting liabilities, essentially the net worth attributable to shareholders.

Accumulated Other Comprehensive Income

This is a component of shareholders' equity apart from retained earnings that includes items such as foreign currency translation adjustments and unrealized gains on securities.