If There Is a Material Weakness in Internal Control Over

question 114

Multiple Choice

If there is a material weakness in internal control over the financial reporting process,the auditor

• A)expresses a qualified opinion on the effectiveness of internal control over financial reporting
• B)considers the effect of compensating controls and whether the compensating control prevents or detects a material misstatement in the financial statements
• C)expresses a subject to opinion on the effectiveness of internal control over financial reporting
• D)expresses an adverse opinion on the effectiveness of internal control over financial reporting

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Definitions:

Compound Interest

A way of computing interest wherein the initial amount of the loan or deposit and all the interest that has accrued in former periods are included in the calculation.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value of all cash flows equal to zero.

Present Value

The present financial value of a future money amount or stream of cash flows, calculated using a specific rate of return.

Annual Net Cash Flows

The amount of cash a company generates after all its expenditures, both operational and capital in nature, have been paid off within a fiscal year.