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AAFM CTEP Exam - Topic 7 Question 5 Discussion

Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?
B) Management is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.
A) Management may be concerned about its reputation in the financial markets.
C) Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.
D) Management may perceive that having quarterly financial information examined by the internal auditors enhances the information's value to internal decision making.

AAFM CTEP Exam - Topic 7 Question 5 Discussion

Actual exam question for AAFM's CTEP exam
Question #: 5
Topic #: 7
[All CTEP Questions]

Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?

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Suggested Answer: B

by Malcolm at Jun 01, 2022, 05:21 AM

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Bobbye
10 months ago
Following best practices is key, so B seems off to me.
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Hui
10 months ago
Not sure about D. Does internal review really add that much value?
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Murray
11 months ago
Surprised that some think penalties aren't a big deal. They can be huge!
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Mattie
11 months ago
I think option B is the least plausible. Not all companies follow those standards.
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Matt
11 months ago
Management cares about their reputation, totally makes sense.
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Elza
11 months ago
I think option D is likely true because internal audits can definitely add value, but I wonder if that's the main reason for their involvement.
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Wilburn
11 months ago
Option C makes sense since penalties for misstated financials can be serious, but I'm not sure if it's the least plausible.
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Merissa
11 months ago
I'm a bit unsure about option B; I thought the Standards were more about annual audits rather than quarterly ones.
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Gilma
11 months ago
I remember discussing how management's reputation is crucial, so option A seems plausible to me.
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Becky
11 months ago
Hmm, this seems like a straightforward membership issue. I'll carefully read through the options and think about the best way to resolve it.
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Louisa
11 months ago
I think using labels is the way to go here. It's a flexible way to group resources based on common policies.
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Royal
11 months ago
I'm feeling a bit lost on this one. There are a lot of details to keep track of when it comes to safety critical systems. I'll need to take my time and really think through each statement carefully.
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