The Standard Report on Internal Controls Over the Financial Reporting

question 56

Multiple Choice

The standard report on internal controls over the financial reporting process is modified by the auditor in which of the following circumstances?

• A)Management's quarterly report on internal control is incomplete or improperly presented
• B)There is a restriction on the scope of the engagement
• C)The auditor decides to refer to the report of management for the auditor's own report
• D)There is other information in management's quarterly report on internal control over financial reporting
• E)Management's annual certification pursuant to Section 302 of the Sarbanes-Oxley Act is misstated
• F)both A and B
• G)both B and E
• H)both C and D

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Definitions:

Managerial Accounting

The practice of identifying, measuring, analyzing, and interpreting accounting information to help managers make informed operational decisions.

Financial Accounting

A branch of accounting that focuses on the process of recording, summarizing, and reporting transactional information related to business operations to external parties.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred, such as administrative expenses.

Product Cost

The total expense incurred in creating a product, including materials, labor, and overhead costs.