question archive 1) In which of the following situations would an auditor be in violation of the ethical rules in determining his or her fee? A
1) In which of the following situations would an auditor be in violation of the ethical rules in determining his or her fee? A
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1) In which of the following situations would an auditor be in violation of the ethical rules in determining his or her fee?
A. A fee based on the time spent on the engagement.
B. A fee based on the nature of the service rendered and the auditor's particular expertise instead of the actual time spent on the engagement
C. A fee based on whether the auditor's report on the client's financial statements results in the approval of bank loan
D. A fee based on the fee charged by the prior auditor.
2.Which of following threats to independence occurs when an auditor is auditing a company where a former audit partner, from the auditor's firm, is now the Chief Financial officer of the company?
A. familiarity threat
B. self-review threat
C. advocacy threat
D. self-interest threat
3.Which of following threats to independence occurs when an auditor help a client to negotiate a loan with a bank?
A. integrity threat
B. there is no threat to audit independence from this activity
C. advocacy threat
D. self-interest threat
4.Which of the following represents a risk of financial misstatement at the financial report level?
A. The client has recently signed a contract with an engineering company to commence work on a new technologically advanced manufacturing machine.
B. The client has recently replaced the entire accounting department following mass resignation of staff in the department.
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- C. This will be a self interest threat when a fee is dependent on the result of the audit. This will question the integrity of the audit opinion provided by the auditor
- A. This will be familiarity threat as the auditor will be auditing a company which is now under stewardship of a former partner of the form. the auditor might not be able to provide an objective opinion we he is familiar with the current CFO
- C . Advocacy threat occurs Occurs when the audit firm, or a member of the audit team, promotes, or may be perceived to promote, an audit client's position or opinion
- are there any options for this? If none, among the 2 the best answer would be letter B.
