Which of the Following Statements Is Correct Concerning an Auditor's

question 30

Multiple Choice

Which of the following statements is correct concerning an auditor's required communication with those charged with governance?

• A) This communication is required to occur before the auditor's report on the financial statements is issued.
• B) This communication should include management changes in the application of significant accounting policies.
• C) Any significant matter communicated to those charged with governance also should be communicated to management.
• D) Significant audit adjustments proposed by the auditor and recorded by management need not be communicated to those charged with governance.

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Definitions:

Operating Net Cash Flow

The amount of cash generated by a company’s normal business operations over a specific period.

Profitable New Plant

A profitable new plant refers to a newly established manufacturing or production facility that generates earnings in excess of its operating and capital costs.

Long-Term Debt

A type of loan or borrowing that is due for repayment in more than one year.

Tax System

A tax system is the structured framework within which taxes are imposed on individuals, corporations, goods, and services by a government entity.