In Which of the Following Circumstances Would an Auditor Most

question 150

Multiple Choice

In which of the following circumstances would an auditor most likely express an adverse opinion?

• A) The CEO refuses to let the auditor have access to the board of director meeting minutes.
• B) The financial statements are not in conformity with the FASB statement on loss contingencies.
• C) Information comes to the auditor's attention that raises substantial doubt about the ability for the client to continue as a going concern.
• D) Tests of controls show that the internal control structure is so poor that the auditor has to assess control risk at the maximum.

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Definitions:

Cash Inflows

All types of cash received by a business, from operations, financing activities, and investments, contributing to its cash pool.

Salvage Value

The calculated leftover value of an asset at the termination of its useful period.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.

Internal Rate

Typically refers to the Internal Rate of Return (IRR), a financial metric used to estimate the profitability of potential investments.