The Standard Report on Internal Controls Over the Financial Reporting

question 7

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 purpose of the engagement
• C)The auditor decides to refer to the report of other auditors for the auditor's own report
• D)There is other information in management's annual report on internal control over financial reporting
• E)Management's annual certification pursuant to Section 404 of the Sarbanes-Oxley Act is misstated
• F)both A and B
• G)both C and E
• H)Both C and D

---

Definitions:

Labor Productivity

A measurement of economic performance that shows the amount of goods and services produced per labor hour.

Average Total Cost

The total cost of production divided by the total quantity produced, representing the average cost per unit.

Long Run

A time period in economic analysis during which all factors of production and costs can be variable, allowing for full adjustment to changes in market conditions.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.