An auditor determines that there is an inherent risk that a company has not included both the basic earnings per share and diluted earnings per share amounts in financial statements even though significant dilutive securities are part of the company's complex capital structure.This determination is most likely tied to which of the following management assertions?
A)Valuation.
B)Presentation and disclosure.
C)Rights and obligations.
D)Existence.

Question

Quizplus · Accepted Answer

The management assertion of presentation and disclosure pertains to the completeness and accuracy of financial statement disclosures. If the auditor determines that there is an inherent risk that the company has not included both basic and diluted earnings per share amounts, despite the presence of significant dilutive securities in its complex capital structure, then this is a concern related to the adequacy of financial statement disclosures. Therefore, option B - presentation and disclosure - is the most appropriate choice.

An Auditor Determines That There Is an Inherent Risk That