The SEC Interpretive Guidance "Management's Report on Internal Control Over Financial Reporting" approved in 2007,focuses management on internal controls that best protect against risk of material ________ in financial statements.
A) fraud
B) misstatements
C) negligence
D) mistakes

Question

Quizplus · Accepted Answer

The SEC Interpretive Guidance emphasizes on internal controls to protect against the risk of material misstatements in financial statements. It does not specifically mention negligence or mistakes as the focus of internal controls. While internal controls can help mitigate the risk of fraud, the primary focus of the guidance is on preventing material misstatements. Therefore, option B - misstatements - is the most appropriate choice.