An Entity Has Violated a Minor Requirement of Its Bond

question 45

Multiple Choice

An entity has violated a minor requirement of its bond indenture that could result in the trustee requiring immediate payment of the principal amount due.The entity refuses to seek a waiver from the bond trustee.Request for immediate payment is not considered likely.Under these circumstances,the auditor must

• A) require classification of bonds payable as a current liability.
• B) contact the bond trustee directly.
• C) disclose the situation in the auditor's report.
• D) obtain an opinion from the company's attorney as to the likelihood of the trustee's enforcement of the requirement.

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Definitions:

Authenticity

The degree to which an individual's actions are congruent with their beliefs and desires, despite external pressures.

Components

Distinct parts or elements that combine to form a whole system or complex entity.

Awareness

The state or ability to perceive, feel, or be conscious of events, objects, or sensory patterns.

Unbiased Processing

The objective evaluation and interpretation of information, without being influenced by personal prejudices or emotions.