Material misstatements in the financial statements, including those requiring restatements strongly imply a material weakness in which of the following?
A) Income statement.
B) Balance sheet.
C) Internal control over financial reporting.
D) Cash flow statements.

Question

Quizplus · Accepted Answer

Material misstatements in the financial statements, which require restatements, could be indicative of a breakdown in internal controls, leading to material weakness in internal control over financial reporting. A material weakness in internal control over financial reporting increases the risk of financial misstatements, which could lead to inaccurate, incomplete, or unreliable information in the company's financial statements. Therefore, the correct answer is C, which refers to internal control over financial reporting.

Material Misstatements in the Financial Statements, Including Those Requiring Restatements