Disclosure, Audit and Corporate Accountability

Introduction and context

Corporate accountability is the system through which a company explains, justifies and accepts responsibility for its decisions, resources and impacts. Disclosure and audit are central to that system. Disclosure communicates information to shareholders, lenders, regulators, employees, customers and the wider public. Audit and assurance increase confidence that reported information is reliable, complete and prepared according to an appropriate framework. Internal controls reduce the risk that transactions, assets, decisions or reports are inaccurate or improperly managed.

Modern corporate accountability extends beyond annual financial statements. Companies are expected to report material environmental, social and governance matters; identify individuals who ultimately own or control entities; explain governance arrangements; and provide timely information to capital markets. The central challenge is not simply producing more information. It is producing information that is relevant, comparable, understandable, verifiable and connected to decision-making.

This chapter adopts a general international perspective. Exact filing deadlines, audit thresholds, beneficial-ownership registers, accounting standards and enforcement powers vary by jurisdiction. A company must therefore combine general governance principles with the applicable company, securities, accounting, auditing, tax, anti-money-laundering and data-protection laws of its jurisdiction.

Learning objectives

By the end of this chapter, the learner should be able to:

1. Distinguish financial, non-financial, regulatory and market disclosures.
2. Explain the purposes and limitations of external audit, internal audit and assurance.
3. Evaluate internal controls using risk, control and evidence-based reasoning.
4. Explain beneficial ownership and the importance of transparency in corporate structures.
5. Apply governance indicators and compliance analytics to identify reporting and accountability risk.
6. Recommend practical improvements while recognising legal, ethical and professional limitations.

1. The accountability architecture

A company is accountable through several connected relationships. Directors are accountable to the company and, subject to applicable law, to shareholders and other stakeholders. Management is accountable to the board for operations and reporting. The board is accountable for oversight, strategy, risk and the integrity of published information. Auditors are accountable for performing their engagements in accordance with professional standards and for reporting their conclusions. Regulators monitor compliance and may investigate or sanction misconduct.

Accountability has three dimensions:

• Answerability: the duty to explain decisions, performance and use of resources.
• Enforceability: the possibility of investigation, correction, liability, penalty or other consequence.
• Responsiveness: the capacity to address legitimate concerns and correct deficiencies.

Disclosure supports answerability, but disclosure alone does not guarantee accountability. A report may be technically compliant yet misleading because it omits material context, uses selective measures or buries adverse information in excessive detail. Effective accountability therefore requires truthful content, suitable timing, accessible presentation, responsible oversight and credible consequences.

A useful conceptual chain is:

Business activity → records and controls → management reporting → board oversight → external disclosure → assurance and stakeholder scrutiny → corrective action.

A weakness at any point can undermine the reliability of the whole system. For example, an auditor cannot fully compensate for missing source records, and a well-designed control cannot prevent directors from intentionally overriding it.

2. Financial reporting duties

2.1 Purpose and qualities of financial information

Financial statements communicate an entity’s financial position, financial performance and cash flows. Their users commonly include investors, lenders, suppliers, employees, tax authorities and regulators. Financial reporting normally includes a statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and explanatory notes, together with comparative information where required.

The applicable accounting framework determines recognition, measurement, presentation and disclosure. Common frameworks include national generally accepted accounting principles and International Financial Reporting Standards. The governing framework should be identified clearly; an entity should not present statements as complying with a framework unless it has complied with its relevant requirements.

Useful financial information should generally be:

• Relevant: capable of influencing decisions, including through predictive or confirmatory value.
• Faithfully represented: complete, neutral and free from material error, subject to the nature of estimates.
• Comparable: capable of being compared across periods and with other entities.
• Verifiable: capable of being supported by evidence or well-founded methods.
• Timely: available before it loses decision value.
• Understandable: presented clearly without concealing important complexity.

Materiality is a judgment about whether omitting, misstating or obscuring information could reasonably influence users’ decisions. It is not determined only by a numerical threshold. A relatively small related-party transaction may be material because of its nature, while a large routine transaction may be less significant in context.

2.2 Management responsibility

Management is responsible for preparing financial statements, maintaining accounting records, selecting appropriate accounting policies, making reasonable estimates and designing internal controls. The board or audit committee oversees the process. External auditors do not prepare management’s accounts or assume management’s responsibility merely because they audit them.

Important disclosure areas commonly include:

• accounting policies and significant judgments;
• estimates and estimation uncertainty;
• commitments, contingencies and litigation;
• related-party transactions;
• segment information where applicable;
• going-concern assumptions;
• subsequent events;
• financial instruments and risk exposures;
• revenue recognition and asset impairment;
• remuneration and governance matters where required.

A going-concern assessment asks whether the company can continue operating for the foreseeable future. It considers liquidity, financing, covenant compliance, forecast cash flows, operational dependence and available mitigation. Directors should not treat going concern as a formality, particularly where there are persistent losses, severe cash constraints or refinancing dependence.

2.3 Useful analytical measures

Financial ratios can assist compliance analytics, but they are indicators rather than proof of misconduct. For example, the current ratio is:

Current assets and current liabilities must be measured consistently under the applicable accounting framework. A high ratio does not necessarily mean strong liquidity if current assets are obsolete inventory or doubtful receivables.

The debt-to-equity ratio is:

The analyst must define whether debt includes lease liabilities and whether equity includes non-controlling interests. Comparisons are meaningful only when definitions and accounting policies are consistent.

A simple year-on-year change is:

The prior period amount must not be zero; where it is zero, an ordinary percentage change is undefined and the analyst should use an absolute change or another measure. Ratios should be interpreted alongside business conditions, industry benchmarks, accounting judgments and non-financial evidence.

3. Non-financial and sustainability reporting

Non-financial reporting covers information that may affect an organisation’s strategy, resilience, reputation, legal exposure or social licence to operate. It may include climate risks, greenhouse-gas emissions, workforce health and safety, diversity, human rights, supply-chain practices, data security, anti-corruption controls and community impacts.

A strong non-financial report explains:

1. Governance: who oversees the issue and how responsibility is assigned.
2. Strategy: how the issue affects the business model and decisions.
3. Risk management: how risks are identified, assessed and controlled.
4. Metrics and targets: what is measured, against which baseline and with what time horizon.
5. Performance: progress, setbacks, assumptions and limitations.

The concept of materiality differs across reporting regimes. Financial materiality considers whether an issue could influence providers of capital. Impact materiality considers the company’s significant effects on people, the environment or the economy. Some contemporary frameworks combine these perspectives, often called double materiality.

Non-financial information presents special risks. Emissions may depend on boundaries and estimation methods. Safety data may be distorted by inconsistent definitions. Social indicators may omit temporary, contracted or overseas workers. Targets may be reported without a baseline, interim milestones or a plan for achievement. Therefore, users should examine methodology, scope, assurance level and comparability rather than relying on attractive narrative.

Greenwashing and social-washing occur when communications create an unjustifiably favourable impression of environmental or social performance. Controls against such conduct include evidence-based claims, review by sustainability and legal specialists, documented methodologies, balanced reporting of adverse results and board approval of material statements.

4. Audit and assurance

4.1 External audit

An external audit is an independent examination designed to enable the auditor to express an opinion on whether financial statements are prepared, in all material respects, in accordance with the applicable framework. An audit provides reasonable assurance, not absolute assurance. Reasonable assurance is a high level of assurance, but it cannot eliminate risk because auditors use sampling, professional judgment, estimates and selective testing.

The audit risk model is commonly expressed as:

• Audit risk (AR): risk that the auditor expresses an inappropriate opinion when the statements are materially misstated.
• Inherent risk (IR): susceptibility of an assertion to material misstatement before considering controls.
• Control risk (CR): risk that a relevant misstatement will not be prevented, detected or corrected by controls.
• Detection risk (DR): risk that audit procedures will not detect a material misstatement that exists.

The multiplicative expression is a planning model, not a precise physical law. The components are not measured with perfect mathematical accuracy, and the model assumes the risks are assessed consistently for a relevant assertion and audit scope. Where inherent and control risks are high, the auditor ordinarily reduces acceptable detection risk by designing more persuasive or extensive procedures.

Audit procedures include inspection, observation, confirmation, recalculation, reperformance, analytical procedures and inquiry. Inquiry alone is generally less persuasive than corroborated evidence. The auditor assesses risks at the financial-statement and assertion levels, including existence, completeness, accuracy, valuation, rights and obligations, and presentation.

4.2 Internal audit and external assurance

Internal audit is an independent and objective assurance and consulting function designed to add value and improve operations, risk management, control and governance. It normally reports functionally to the audit committee or board, although it may administratively report to management. Internal audit does not replace management controls or external audit.

Assurance engagements may cover financial information, sustainability data, cybersecurity, regulatory compliance or controls. Limited assurance involves less extensive procedures and provides a lower level of assurance than reasonable assurance. The wording and procedures differ by standard, so users should read the assurance conclusion carefully rather than treating every assurance statement as an audit opinion.

4.3 Auditor independence and professional scepticism

Independence includes independence in fact and independence in appearance. Threats may arise from financial interests, close relationships, advocacy, familiarity, self-review and intimidation. Safeguards may include rotation, independent review, restrictions on non-audit services, segregation of personnel and audit committee oversight. Some threats cannot be reduced to an acceptable level; withdrawal may then be necessary.

Professional scepticism means maintaining a questioning mind and critically assessing evidence. It is especially important for management estimates, unusual transactions, related parties, revenue recognition, journal entries and representations that conflict with external evidence.

5. Internal control and compliance systems

Internal control is a process effected by the board, management and personnel to provide reasonable assurance regarding operations, reporting and compliance objectives. It is not merely a finance department procedure. A widely used structure includes:

• Control environment: integrity, ethical values, accountability and competence.
• Risk assessment: identification and analysis of threats to objectives.
• Control activities: approvals, reconciliations, segregation of duties, access controls and physical safeguards.
• Information and communication: timely flow of relevant information.
• Monitoring: evaluation of whether controls continue to operate effectively.

A control should be linked to a specific risk. For example, the risk of fictitious suppliers may be addressed by independent supplier verification, restricted master-file access, approval of changes and analytical review of unusual payments.

Preventive and detective controls

Preventive controls aim to stop an error or fraud before it occurs, such as system validation or approval limits. Detective controls identify problems after occurrence, such as bank reconciliations, exception reports and internal audits. Corrective controls address identified problems and prevent recurrence, such as recovery, disciplinary action, system redesign and training.

Segregation of duties

Segregation of duties separates incompatible responsibilities, normally authorisation, custody, recording and reconciliation. In a small company, complete segregation may be impractical. Compensating controls can include director review, independent bank statements, surprise checks, dual approval and restricted system access. A control is not effective merely because it exists on paper; its operation, evidence and follow-up must be tested.

6. Beneficial ownership and corporate transparency

The registered shareholder is not always the person who ultimately owns or controls a company. A beneficial owner is generally the natural person who ultimately owns, controls or exercises effective control over an entity, subject to the definition in applicable law. Control may arise through direct or indirect ownership, voting rights, contractual arrangements, the power to appoint directors or other means.

Beneficial-ownership disclosure helps prevent:

• money laundering and terrorist financing;
• concealment of conflicts of interest;
• bribery and illicit influence;
• sanctions evasion;
• abusive related-party transactions;
• tax evasion and fraudulent asset transfers.

A reliable process should identify the ownership chain, inspect constitutional and shareholder documents, examine voting and appointment rights, verify natural-person identity, record the basis of control and update information after changes. A declaration from an intermediary may be useful but should not automatically be treated as sufficient verification.

Transparency must be balanced with privacy, safety and data-protection requirements. Public access to registers varies by law. Companies should collect only necessary information, protect sensitive data, restrict access appropriately and maintain an auditable record of verification and escalation.

A practical ownership analysis asks:

1. Who holds the registered shares?
2. Who owns those holders?
3. Who controls voting or appointment rights?
4. Are there trusts, nominees, options, agreements or layered entities?
5. Is any individual exercising effective control without majority ownership?
6. Do the disclosed persons match banking, regulatory and transaction records?

7. Market transparency and continuous disclosure

Securities markets depend on timely and equal access to material information. A listed issuer may have duties concerning periodic financial reports, immediate disclosure of price-sensitive information, major transactions, related-party dealings, director interests, changes in control and significant litigation. The precise rules depend on the listing venue and securities regulator.

Information is generally material if a reasonable investor would consider it important in deciding whether to buy, hold or sell a security, or if it could reasonably be expected to affect market price. Examples include an unexpected earnings collapse, major acquisition, loss of a critical licence, cyber incident, insolvency threat or significant regulatory investigation.

Selective disclosure creates unfair informational advantage. Companies should use authorised channels, maintain insider lists where required, control access to confidential information, train employees, impose dealing restrictions and document disclosure decisions. Confidentiality exceptions, where available, usually require that confidentiality can be maintained and that disclosure is not misleading.

Market transparency does not mean publishing every internal development immediately. Excessive, premature or speculative disclosure can confuse investors and damage legitimate commercial interests. The governance task is to distinguish protected confidential information from information whose public importance has become material.

8. Governance indicators and compliance analytics

Compliance analytics uses structured data to identify patterns that warrant investigation. It supports, but does not replace, legal judgment, audit evidence or management accountability. An indicator is a signal, not a conclusion.

Useful indicators include:

A basic exception rate can be calculated as:

The numerator must include only defined exceptions, and the denominator must be the relevant tested population. The rate is meaningful only when sampling method, exception definition and period are documented. A low rate from a biased sample may be less informative than a high rate from a targeted high-risk population.

A simple risk-prioritisation score may combine likelihood and impact:

If each score is rated from 1 to 5, the possible score ranges from 1 to 25. This is a management ranking tool, not a probability estimate unless the organisation has explicitly defined the scales. It should be supplemented by velocity, control effectiveness, regulatory sensitivity and the possibility of cascading harm.

Analytics should follow a controlled process: define the objective, establish data ownership, validate data quality, select indicators, set thresholds, investigate exceptions, document conclusions and monitor outcomes. Automated alerts require human review because unusual does not necessarily mean unlawful, and ordinary-looking transactions can be deliberately structured to evade rules.

Artificial intelligence can assist document classification, anomaly detection, contract review and ownership-network analysis. Risks include biased training data, false positives, unexplained decisions, data leakage and automation bias. Human accountability, access controls, model validation, audit trails and periodic performance testing remain essential.

9. Applied case: Northbridge Components Ltd.

This is an illustrative case. Northbridge Components Ltd. is a medium-sized manufacturer preparing for a proposed stock-market listing. Revenue has increased rapidly, but cash balances have fallen. The finance director proposes recognising several year-end shipments as sales although customers have not accepted delivery. The company’s largest distributor is owned through two holding companies, and a director’s family member appears to control one of them. The sustainability report claims a 30% reduction in emissions but excludes outsourced transport without explaining the boundary. Internal audit has identified repeated manual changes to supplier bank details, while the audit committee has not received a complete remediation report.

Problem

Northbridge faces linked risks: premature revenue recognition, undisclosed related-party relationships, incomplete beneficial-ownership information, misleading sustainability communication, payment fraud and weak board oversight. The proposed listing increases market-disclosure and reputational exposure.

Analysis

The revenue issue affects the occurrence, cutoff and accuracy assertions. Customer acceptance and contractual terms must be examined. The distributor relationship may be a related party or otherwise a material concentration risk, depending on applicable rules and the actual control relationship. Ownership verification should trace the chain to natural persons and examine voting, appointment and contractual rights.

The emissions claim cannot be assessed without a defined organisational and operational boundary, a baseline year, calculation methodology and evidence. Excluding outsourced transport may be legitimate under a stated framework, but presenting the result as a complete operational reduction would be misleading.

Repeated bank-detail changes indicate a control weakness. The board should determine whether any payments were diverted, whether access rights were excessive and whether staff bypassed verification procedures. The audit committee’s failure to track remediation indicates a monitoring and governance deficiency.

Approach and solution

The board should suspend recognition of disputed revenue pending contract review, obtain customer confirmations and assess whether a correction is required. It should commission an independent review of the distributor relationship and update related-party and beneficial-ownership records. The sustainability claim should be withdrawn or revised until its scope and evidence are clear.

For payments, Northbridge should require independent callback verification using trusted contact information, dual approval for bank changes, restricted master-file access and exception reporting. Internal audit should test both design and operating effectiveness. The audit committee should maintain a dated remediation register with owners, deadlines, evidence and escalation status.

The company should also establish a listing-readiness disclosure committee involving finance, legal, risk, sustainability and investor-relations personnel. Its procedures should identify material information, document judgments, control insider access and ensure consistent public communications.

Outcome

In this illustrative case, the company delays the listing, corrects the revenue forecast, discloses the relationship after legal review, qualifies the sustainability claim and confirms that two unauthorised payment attempts were blocked. The board replaces informal follow-up with evidence-based monitoring. The delay creates short-term cost but reduces the risk of a materially misleading prospectus and improves control credibility.

Learning points

1. Disclosure risk often arises from the interaction of several weaknesses rather than one isolated error.
2. Beneficial ownership is a control and integrity issue, not merely a registry exercise.
3. Assurance cannot cure management’s failure to maintain reliable records.
4. Sustainability claims require boundaries, methods and balanced explanation.
5. Governance analytics are valuable when alerts lead to documented investigation and action.

10. Limitations, ethics and professional judgment

No reporting system eliminates uncertainty. Financial statements contain estimates; controls can be overridden; auditors use sampling; analytics depend on data quality; and laws change. A compliance programme can also become superficial if it rewards the number of policies rather than the quality of outcomes.

Ethical accountability requires more than legal minimum compliance. Directors should consider whether a disclosure is technically accurate but likely to mislead a reasonable reader. Auditors and internal auditors should resist management pressure, protect confidentiality and escalate unresolved matters. Employees should have safe channels for reporting concerns, with protection against retaliation.

Common ethical failures include hiding adverse information in complex language, manipulating performance measures, delaying recognition of losses, suppressing whistleblowing, using confidential information for personal benefit and treating assurance as a marketing label. Professional judgment should be documented, challenged by independent reviewers where appropriate and revisited when facts change.

11. Best-practice implementation framework

An organisation seeking stronger accountability should:

1. Map all legal, regulatory, contractual and voluntary reporting obligations.
2. Assign each obligation to an accountable owner and board committee.
3. Maintain a reporting calendar with dependencies and escalation points.
4. Define materiality, data sources, methodologies and approval requirements.
5. Reconcile reported data to underlying systems and investigate unexplained differences.
6. Test controls using both design assessment and operating-effectiveness evidence.
7. Maintain beneficial-ownership records and trigger updates after ownership or control changes.
8. Protect auditor independence and provide the audit committee with private access to assurance functions.
9. Track remediation with deadlines, evidence and independent validation.
10. Use analytics proportionately, preserving privacy and human review.
11. Report adverse developments as clearly as favourable achievements.
12. Review the framework after incidents, regulatory change and major business transformation.

Chapter Summary

Disclosure, audit and corporate accountability form an integrated governance system. Financial reporting communicates financial position, performance and cash flows, while non-financial reporting explains material impacts, risks, governance and targets. Management and the board remain responsible for reliable reporting; external auditors provide reasonable assurance but do not guarantee the absence of error or fraud.

Internal controls connect objectives to risks, control activities, information and monitoring. Beneficial-ownership transparency reveals the natural persons who ultimately own or control entities and supports anti-money-laundering, conflict-of-interest and market-integrity objectives. Continuous disclosure protects market fairness by ensuring that material information reaches investors through appropriate channels.

Governance indicators and compliance analytics can identify delayed filings, unresolved findings, unusual related-party transactions, ownership opacity, access anomalies and unsupported sustainability claims. Their value depends on sound definitions, reliable data, documented investigation and human judgment. Strong accountability ultimately requires truthful communication, independent challenge, ethical leadership, effective controls and credible corrective action.

Key Terms

Accountability: The duty to explain conduct, accept responsibility and face consequences where appropriate.

Assurance: An engagement designed to increase users’ confidence in information or a subject matter.

Audit risk: The risk that an auditor expresses an inappropriate opinion on materially misstated information.

Beneficial owner: The natural person who ultimately owns or controls an entity under applicable law.

Control environment: The organisational culture, structures and behaviours that support internal control.

Continuous disclosure: The timely release of material information to the market.

Control risk: The risk that internal controls fail to prevent, detect or correct a material misstatement.

Detection risk: The risk that audit procedures fail to detect an existing material misstatement.

Double materiality: Assessment of both financial effects on the entity and significant impacts caused by the entity.

External audit: Independent examination of financial statements leading to an audit opinion.

Greenwashing: Misleading or unjustifiably favourable environmental communication.

Internal audit: An independent function that evaluates and improves governance, risk management and control.

Internal control: Processes providing reasonable assurance over operations, reporting and compliance.

Materiality: The significance of an omission, misstatement or obscuring of information to users’ decisions.

Professional scepticism: A questioning mind and critical evaluation of audit evidence.

Reasonable assurance: A high, but not absolute, level of assurance.

Related party: A person or entity connected to the reporting entity under the applicable accounting framework.

Risk indicator: A measure or signal used to identify possible exposure or control weakness.

Selective disclosure: Providing material information to some persons before the wider market.

Whistleblowing: Reporting suspected wrongdoing through protected internal or external channels.

Review Questions

5 Short Answer Questions

1. Why does an external audit provide reasonable rather than absolute assurance?
2. Define beneficial ownership and explain why it matters for corporate transparency.
3. Distinguish preventive, detective and corrective controls.
4. What is meant by double materiality?
5. Why should a compliance indicator be treated as a signal rather than proof of misconduct?

5 Long Answer Questions

1. Explain the relationship between management responsibility, board oversight, internal control and external audit.
2. Discuss the qualities that make financial information useful and explain the role of materiality.
3. Analyse the principal risks and safeguards associated with sustainability and non-financial reporting.
4. Explain the audit risk model, define each component and discuss its limitations as a planning tool.
5. Evaluate how beneficial-ownership disclosure and continuous market disclosure support corporate accountability.

3 Analytical / Application Questions

1. A company has rising profits, falling cash, frequent year-end sales and several unresolved audit findings. Design an investigation using financial analysis, control testing and governance escalation.
2. A group contains six holding companies across three jurisdictions and uses nominee shareholders. Develop a process for identifying and verifying the ultimate beneficial owner while respecting privacy obligations.
3. A company claims a major emissions reduction but changes its measurement boundary each year. Assess the disclosure risk and recommend assurance, governance and data-quality measures.

Multiple Choice Questions with Answers

Question 1

Which party is primarily responsible for preparing a company’s financial statements?

A. The external auditor

B. Management

C. The stock exchange

D. The internal audit function

Correct Answer: B. Management

Question 2

In the audit risk model, detection risk is the risk that:

A. The business model is inherently risky

B. Controls fail to prevent a misstatement

C. Audit procedures fail to detect an existing misstatement

D. Users misunderstand the financial statements

Correct Answer: C. Audit procedures fail to detect an existing misstatement

Question 3

Which control is primarily detective?

A. System validation preventing an invalid invoice

B. Pre-approval of a purchase order

C. Bank reconciliation identifying unexplained differences

D. Restricted access to the supplier master file

Correct Answer: C. Bank reconciliation identifying unexplained differences

Question 4

A beneficial owner is generally:

A. Only the company secretary

B. The external auditor signing the report

C. The natural person who ultimately owns or controls the entity

D. Any employee with access to accounting records

Correct Answer: C. The natural person who ultimately owns or controls the entity

Question 5

Which feature most directly improves the credibility of a sustainability claim?

A. A prominent graphic without supporting data

B. A defined boundary, methodology, baseline and evidence

C. Exclusion of unfavourable performance

D. Use of a target without an achievement date

Correct Answer: B. A defined boundary, methodology, baseline and evidence

Question 6

If 12 exceptions are found in a test of 240 items, what is the exception rate?

A. 2%

B. 5%

C. 12%

D. 20%

Correct Answer: B. 5%

Question 7

Which situation most clearly raises a selective-disclosure concern?

A. Publishing an audited annual report through the required channel

B. Giving material unpublished earnings information to a small investor group

C. Updating a public corporate website with historical information

D. Issuing a general staff training notice

Correct Answer: B. Giving material unpublished earnings information to a small investor group

Question 8

What is the main purpose of segregation of duties?

A. To ensure every task is performed by an auditor

B. To separate incompatible responsibilities and reduce error or fraud risk

C. To eliminate the need for management approval

D. To transfer all accountability to the finance department

Correct Answer: B. To separate incompatible responsibilities and reduce error or fraud risk

Question 9

Which statement about compliance analytics is most accurate?

A. An alert automatically proves a legal violation

B. Analytics can replace professional and legal judgment

C. Analytics identify patterns requiring documented human investigation

D. Analytics are reliable regardless of data quality

Correct Answer: C. Analytics identify patterns requiring documented human investigation

Question 10

Under the current ratio formula, a company with current assets of 900 and current liabilities of 600 has a current ratio of:

A. 0.67:1

B. 1.0:1

C. 1.5:1

D. 2.0:1

Correct Answer: C. 1.5:1