Deficiencies in Internal Control Identified by the Auditor That Are

question 40

Multiple Choice

Deficiencies in internal control identified by the auditor that are lesser than significant deficiencies:

• A) Must be communicated to the board of directors, the audit committee, and management.
• B) Must be reported to the audit committee and management.
• C) Must be communicated to management, with the audit committee only informed of the communication to management.
• D) Need not be disclosed unless they in aggregate equal (at least) a significant deficiency.

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Definitions:

Sump Pump

A device used to remove accumulated water from a sump basin, commonly found in the basements of homes.

Moral Obligation

A duty or commitment that is not legally enforceable but is based on ethical or moral considerations.

Preexisting Duty Rule

A legal principle that an existing obligation or duty cannot serve as consideration for a new contract.

Rescission

The act of canceling a contract, returning both parties to their pre-contractual situation.