Question : 11.6   Learning Objective 11-6 1) It management’s responsibility to issue a : 1230051

11.6   Learning Objective 11-6

1) It is management’s responsibility to issue a report on internal control.

2) Publicly traded companies have the option to produce audited financial statements.

3) Publicly traded companies have to file their financial statements with the IRS.

4) An audit report is addressed to the board of directors and stockholders of the company.

5) It is NOT the independent auditor’s responsibility to determine whether the company’s financial statements comply with GAAP.

6) The audit report is signed-off by the corporation’s management, confirming the audit was completed properly.

7) The combined audit report on financial statements and internal control over financial reporting typically contains five paragraphs.

8) An unqualified opinion by independent auditors indicates the fairness of the company’s financial statements and the effectiveness of its internal controls.

9) A statement of responsibility, issued along with a company’s financial statements, indicates that the financial statements are the responsibility of:

A) the independent auditors.

B) the shareholders.

C) management.

D) the board of directors.

10) The statement of management’s responsibility, issued along with a company’s financial statements, indicates all of the following EXCEPT that management:

A) is responsible for establishing and maintaining an adequate system of internal control.

B) conducted an assessment of internal control over financial reporting based on the framework established by COSO.

C) states that the internal controls of the company have been audited by the company’s outside auditors.

D) has hired a new CEO in the current year.

11) Which entity requires companies issuing publicly traded stock to have their financial statements audited by an external auditor?

A) Securities and Exchange Commission

B) Internal Revenue Service

C) Committee of Sponsoring Organizations

D) Financial Accounting Standards Board

12) The independent auditors’ report is addressed to:

A) management.

B) board of directors only.

C) stockholders only.

D) board of directors and stockholders.

13) The paragraph in a typical audit report that describes how the audit was performed is the:

A) first paragraph.

B) second paragraph.

C) third paragraph.

D) fourth paragraph.

14) The paragraph in a typical audit report that describes the inherent limitations in the system of internal control is the:

A) first paragraph.

B) second paragraph.

C) third paragraph.

D) fourth paragraph.

15) An auditing opinion that is an unqualified (clean) opinion indicates that the company’s:

A) statements are presented in accordance with GAAP and that the financial statements are reliable.

B) statements are presented accordance with GAAP and can be sent to the Internal Revenue Service.

C) employees are all bonded (if required).

D) management is acting with the utmost responsibility and proper internal control is in place.