In Which of the Following Circumstances Would an Auditor of Financial

question 48

Multiple Choice

In which of the following circumstances would an auditor of financial statements be most likely to express an adverse opinion?

• A) The statements are not in conformity with FASB requirements regarding the capitalization of leases.
• B) Information comes to the auditor's attention that raises substantial doubt about the entity's ability to continue in existence.
• C) The chief executive officer refuses the auditor access to minutes of board of directors' meetings.
• D) Tests of controls show that the entity's internal control is so poor that it can not be relied upon.

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Definitions:

Defence Mechanism

Psychological strategies brought into play by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety and unacceptable impulses.

Displacement

A psychological defense mechanism where an individual shifts emotions from one object or idea to another, often less threatening, target.

Projection

A defense mechanism where an individual ascribes their own unwanted thoughts, feelings, or motives to another person.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus.