An effective board of directors helps ensure that the company takes only appropriate risks.The audit committee can
A)reduce the likelihood of fraud and financial statement errors through oversight of the entity-level controls.
B)reduce the likelihood of financial statement errors by helping management of the company with complex financial reporting issues.
C)reduce the likelihood of financial statement errors by helping management in the preparation of the financial statements and related notes.
D)reduce the likelihood of overly aggressive accounting through oversight of financial reporting.

Question

Quizplus · Accepted Answer

The audit committee's oversight of financial reporting helps reduce the likelihood of overly aggressive accounting practices, which in turn reduces the risk of inappropriate financial risks being taken. Options A, B and C all relate to the prevention of financial statement errors and fraud, which is important, but not directly related to managing risks in the company.

An Effective Board of Directors Helps Ensure That the Company