Significant deficiencies are matters that come to an auditor's attention and should be communicated to an entity's audit committee because they represent:
A)material frauds perpetrated by high-level management.
B)internal control deficiencies that could adversely affect a company's ability to initiate, record, process, or report external financial statements reliably.
C)flagrant violations of the entity's documented conflict-of-interest policies.
D)intentional attempts by client personnel to limit the scope of the auditor's field work.

Question

Quizplus · Accepted Answer

Significant deficiencies refer to internal control deficiencies that could adversely affect a company's ability to initiate, record, process, or report external financial statements reliably. These deficiencies need to be communicated to an entity's audit committee so that appropriate actions can be taken to rectify them. The other options (A, C, D) are incorrect because they do not accurately describe significant deficiencies.

Significant Deficiencies Are Matters That Come to an Auditor's Attention