An Auditor Expresses an Unqualified Opinion on the Financial Statements

question 60

Multiple Choice

An auditor expresses an unqualified opinion on the financial statements of a publically held client. Subsequent to the audit, the client files for bankruptcy protection. If the bankruptcy was caused by poor internal controls at a service provider, the auditor may use as a valid defense which of the following?

• A) It relied on the work of another auditor.
• B) It extended its testing of the client's internal control environment.
• C) It extended its testing of client internal controls by performing tests of controls at the service provider.
• D) Any of the above depending on the circumstances.

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Definitions:

Moral

Pertaining to principles of right and wrong behavior, and the goodness or badness of human character.

Piaget's Theory

A comprehensive theory about the nature and development of human intelligence proposed by Jean Piaget.

Cognitive Ability

The capacity to perform various mental activities related to learning, thinking, reasoning, and problem-solving.

Biological

Pertaining to the processes, structures, and functions of living organisms or the science of life and living processes.