When considering fraud risk factors relating to management’s characteristics, which of the following is least likely to indicate a risk of possible misstatement due to fraud? a. Failure to correct known reportable conditions on a timely basis. b. Use of unusually conservative accounting practices. c. Nonfinancial management’s preoccupation with the selection of accounting principles. d. Significant portion of management’s compensation represented by bonuses based upon achieving unduly aggressive operating results.

When considering fraud risk factors relating
to management’s characteristics, which of
the following is least likely to indicate a risk
of possible misstatement due to fraud?
a. Failure to correct known reportable
conditions on a timely basis.
b. Use of unusually conservative
accounting practices.
c. Nonfinancial management’s
preoccupation with the selection of
accounting principles.
d. Significant portion of management’s
compensation represented by bonuses
based upon achieving unduly aggressive
operating results.
by

1 Answer

Answer :

Use of unusually conservative
accounting practices.
by

Related questions

Which of the following factors most likely would heighten an auditor's concern about the risk of fraudulent financial reporting? a. Large amounts of liquid assets that are easily convertible into cash. b. Low growth and profitability as compared to other entity's in the same industry. c. Financial management's participation in the initial selection of accounting principles. d. An overly complex organizational structure involving unusual lines of authority.

Description : Which of the following factors most likely would heighten an auditor's concern about the risk of fraudulent financial reporting? a. Large amounts of liquid assets that are easily ... of accounting principles. d. An overly complex organizational structure involving unusual lines of authority.

Last Answer : An overly complex organizational structure involving unusual lines of authority.

Which of the following conditions identified during fieldwork of an audit is most likely to affect the auditor’s assessment of the risk of misstatement due to fraud? a. Year-end adjusting journal entries. b. Checks for significant amounts outstanding at year-end. c. Missing documents. d. Computer generated documents

Description : Which of the following conditions identified during fieldwork of an audit is most likely to affect the auditor's assessment of the risk of misstatement due to fraud? a. Year-end adjusting ... for significant amounts outstanding at year-end. c. Missing documents. d. Computer generated documents

Last Answer : Missing documents

Which of the following is most likely to be a response to the auditor's assessment that the risk of material misstatement due to fraud for the existence of inventory is high? a. Observe test counts of inventory at certain locations on an unannounced basis. b. Perform analytical procedures rather than taking test counts. c. Request that inventories be counted prior to year end. d. Request that inventory counts at the various locations be counted on different dates so as to allow the same auditor to be present at every count

Description : Which of the following is most likely to be a response to the auditor's assessment that the risk of material misstatement due to fraud for the existence of inventory is high? a. Observe test counts ... be counted on different dates so as to allow the same auditor to be present at every count

Last Answer : Observe test counts of inventory at certain locations on an unannounced basis.

Which of the following best describes what is meant by the term “fraud risk factor?” a. Factors whose presence indicates that the risk of fraud is high. b. Factors whose presence requires modification of planned audit procedures. c. Factors whose presence often have been observed in circumstances where frauds have occurredd. Reportable conditions identified duringan audit

Description : Which of the following best describes what is meant by the term fraud risk factor? a. Factors whose presence indicates that the risk of fraud is high. b. Factors whose ... often have been observed in circumstances where frauds have occurredd. Reportable conditions identified during an audit

Last Answer : Factors whose presence often have been observed in circumstances where frauds have occurred

The practitioner makes a critical assessment of validity of audit evidence, with a questioning mind and being alert to conditions which may indicate possible misstatement due to error or fraud. a. Objectivity and integrity b. Professional c. Independence is mental attitude d. Sufficient appropriate evidence

Description : The practitioner makes a critical assessment of validity of audit evidence, with a questioning mind and being alert to conditions which may indicate possible misstatement due to error or ... integrity b. Professional skepticism c. Independence is mental attitude d. Sufficient appropriate evidence

Last Answer : Professional skepticism

Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in an organization. b. Application of generally accepted accounting principles results in a fair presentation of financial statements. c. When examining financial data foropinion thereon, the auditor actsexclusively in the capacity of an auditor.d. In collecting evidence, auditorsshould maintain an attitude of trustabout their clients' assertions. the purpose of expressing an independent

Description : Which of the following is an incorrect statement relating to the theoretical framework of auditing? a. Effective internal control structure reduces the probability of fraud or irregularities in ... collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

Last Answer : In collecting evidence, auditors should maintain an attitude of trust about their clients' assertions.

The risk of material financial statement misstatement may be greater when the following conditions exist except a. When there is greater management intervention to specify the accounting treatment. b. When there is sufficient personnel with appropriate accounting and financial reporting skillsc. When there is greater manual intervention for data collection and processing. d. Complex calculations or accounting principles is involved.

Description : The risk of material financial statement misstatement may be greater when the following conditions exist except a. When there is greater management intervention to specify the accounting treatment. ... for data collection and processing. d. Complex calculations or accounting principles is involved

Last Answer : When there is sufficient personnel with appropriate accounting and financial reporting skills

The primary factor that distinguishes errors from fraud is a. Whether the misstatement is perpetrated by an employee or by a member of management b. Whether the underlying cause of misstatement is intentional or unintentional. c. Whether the misstatement is concealed. d. Whether the underlying cause of misstatement relates to misapplication of accounting principles or to clerical processing

Description : The primary factor that distinguishes errors from fraud is a. Whether the misstatement is perpetrated by an employee or by a member of management b. Whether the underlying cause of ... the underlying cause of misstatement relates to misapplication of accounting principles or to clerical processing

Last Answer : Whether the underlying cause of misstatement is intentional or unintentional.

Which of the following is least likely included in an auditor’s inquiry of management while obtaining information to identify the risks of material misstatement due to fraud? a. Are financial reporting operations controlled by and limited to one location? b. Does it have knowledge of fraud or suspect fraud? c. Does it have programs to mitigate fraud risks? d. Has it reported to the audit committee the nature of the company's internal control?

Description : Which of the following is least likely included in an auditor's inquiry of management while obtaining information to identify the risks of material misstatement due to fraud? a. Are financial reporting ... d. Has it reported to the audit committee the nature of the company's internal control?

Last Answer : Are financial reporting operations controlled by and limited to one location?

Which of the following statements is correct relating to the auditor’s consideration of fraud? a. The auditor’s interest in fraud consideration relates to fraudulent acts that cause a material misstatement of financial statements. b. A primary factor that distinguishes fraud from error is that fraud is always intentional, while errors are generally, but not always, intentional. c. While an auditor should be aware of the possibility of fraud, management, and not the auditor, is responsible for detecting fraud. d. Fraud always involves a pressure or incentive to commit fraud, and a misappropriation of assets

Description : Which of the following statements is correct relating to the auditor's consideration of fraud? a. The auditor's interest in fraud consideration relates to fraudulent acts that cause a material ... d. Fraud always involves a pressure or incentive to commit fraud, and a misappropriation of assets

Last Answer : The auditor’s interest in fraud consideration relates to fraudulent acts that cause a material misstatement of financial statements.

Which of the following least likely limits the auditor’s ability to detect material misstatement? a. The inherent limitations of any accounting and internal control system. b. Most audit evidences are conclusive rather than being persuasive. c. Audit is based on testing d. Audit procedures that are effective in detecting ordinary misstatements are ineffective in detecting intentional misstatements

Description : Which of the following least likely limits the auditor's ability to detect material misstatement? a. The inherent limitations of any accounting and internal control system. b ... procedures that are effective in detecting ordinary misstatements are ineffective in detecting intentional misstatements

Last Answer : Most audit evidences are conclusive rather than being persuasive

Which of the following is least likely to be required on an audit? a. Review accounting estimates for biases. b. Test appropriateness of journal entries and adjustment. c. Make a legal determination of whether fraud has occurred. d. Evaluate the business rationale for significant unusual transactions

Description : Which of the following is least likely to be required on an audit? a. Review accounting estimates for biases. b. Test appropriateness of journal entries and adjustment. c. ... determination of whether fraud has occurred. d. Evaluate the business rationale for significant unusual transactions

Last Answer : Make a legal determination of whether fraud has occurred.

Which of the following is least likely to be required on an audit? a. Review accounting estimates for biases b. Test appropriateness of journal entries and adjustment c. Make a legal determination of whether fraud has occurred d. Evaluate the business rationale for significant, unusual transactions

Description : Which of the following is least likely to be required on an audit? a. Review accounting estimates for biases b. Test appropriateness of journal entries and adjustment c. Make a legal determination of whether fraud has occurred d. Evaluate the business rationale for significant, unusual transactions

Last Answer : Make a legal determination of whether fraud has occurred

The auditor's understanding of the entity and its environment consists an understanding of the following aspects: a. Industry, regulatory and other external factors, including the applicable financial reporting framework b. Nature of the entity, including the entity's selection and application of accounting policies c. Objectives and strategies and the related business risks that may result in a material misstatement of the financial statements d. All of these.

Description : The auditor's understanding of the entity and its environment consists an understanding of the following aspects: a. Industry, regulatory and other external factors, including the applicable financial reporting ... may result in a material misstatement of the financial statements d. All of these.

Last Answer : All of these.

These refer to events or conditions that may indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. a. Fraud conditions b. Fraud risk factors c. Fraudulent activities d. Fraud events

Description : These refer to events or conditions that may indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. a. Fraud conditions b. Fraud risk factors c. Fraudulent activities d. Fraud events

Last Answer : Fraud risk factors

In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is a. Greater for employee fraud because of the larger number of employees in the organization. b. Greater for employee fraud because of the higher crime rate among blue collar workers. c. Greater for management fraud because of management's ability to override existing internal controls. d. Greater for management fraud because managers are inherently smarter than employees.

Description : In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is a. Greater for employee fraud because of the larger number of employees in ... existing internal controls. d. Greater for management fraud because managers are inherently smarter than employees.

Last Answer : Greater for management fraud because of management's ability to override existing internal controls

In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is a. Greater for employee fraud because of the larger number of employees in the organization. b. Greater for management fraud because of management's ability to override existing internal controls. c. Greater for employee fraud because of the higher crime rate among blue collar workers. d. Greater for management fraud because managers are inherently smarter than employees

Description : In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is a. Greater for employee fraud because of the larger number of employees in the ... blue collar workers. d. Greater for management fraud because managers are inherently smarter than employees

Last Answer : Greater for management fraud because of management's ability to override existing internal controls

Which of the following statements would least likely appear in an auditor's engagement letter? a. Our engagement is subject to the risk that material errors, fraud, and defalcations, if they exist, will not be detected. b. During the course of our audit we may observe opportunities for economy in, or improved controls over, your operations. c. After performing our preliminary analytical procedures we will discuss with you the other procedures we consider necessary to complete the engagement. d. Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket expenses

Description : Which of the following statements would least likely appear in an auditor's engagement letter? a. Our engagement is subject to the risk that material errors, fraud, and defalcations, if they exist, ... services are based on our regular per diem rates, plus travel and other out-of-pocket expenses

Last Answer : After performing our preliminary analytical procedures we will discuss with you the other procedures we consider necessary to complete the engagement.

A operational audit is primarily oriented toward a. Future improvements to accomplish management’s goals. b. Past protection provided by existing internal control. c. Operational information is in accordance with generally accepted accounting principles. d. Financial statements are fairly presented.

Description : A operational audit is primarily oriented toward a. Future improvements to accomplish management’s goals. b. Past protection provided by existing internal control. c. Operational information is in accordance with generally accepted accounting principles. d. Financial statements are fairly presented.

Last Answer : Future improvements to accomplish management’s goals.

Which of the following is not included in the engagement letter? a. Objectives of the engagement b. Management's responsibilities c. A clear explanation of the services to be performed on the engagement d. Representations that the financial statements were prepared in accordance with generally accepted accounting principles

Description : Which of the following is not included in the engagement letter? a. Objectives of the engagement b. Management's responsibilities c. A clear explanation of the services to ... d. Representations that the financial statements were prepared in accordance with generally accepted accounting principles

Last Answer : Representations that the financial statements were prepared in accordance with generally accepted accounting principles

In planning the audit engagement, the auditor should consider each of the following, except a. Matters relating to the entity's business and the industry in which it operates. b. Materiality level and audit risk. c. The kind of opinion (unmodified, qualified, or adverse) that is likely to be expressed. d. The entity's accounting policies and procedures.

Description : In planning the audit engagement, the auditor should consider each of the following, except a. Matters relating to the entity's business and the industry in which it operates. b. Materiality level and ... or adverse) that is likely to be expressed. d. The entity's accounting policies and procedures.

Last Answer : The kind of opinion (unmodified, qualified, or adverse) that is likely to be expressed

In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b. Provide a moderate level of assurance that the information is free of material misstatement. c. Provide a high, but not absolute, level of assurance that the information is free of material misstatement. d. Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

Description : In an engagement to perform agreed-upon procedures, an auditor is engaged to: a. Use accounting expertise as opposed to auditing expertise to collect, classify, and summarize financial information. b ... and the entity and any appropriate third parties have agreed and to report on factual findings

Last Answer : Carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings

Which of the following factors or conditions is an auditor least likely to plan an audit to discover? a. High turnover of senior management. b. Inadequate monitoring of significant controls. c. Inability to generate positive cash flows from operations. d. Financial pressures affecting employees

Description : Which of the following factors or conditions is an auditor least likely to plan an audit to discover? a. High turnover of senior management. b. Inadequate monitoring of significant controls. c. Inability to generate positive cash flows from operations. d. Financial pressures affecting employees

Last Answer : Financial pressures affecting employees

Which of the following is most likely to be considered a risk factor relating to fraudulent financial reporting? a. Low turnover of senior management. b. Extreme degree of competition within the industry. c. Capital structure including various operating subsidiaries. d. Sales goals in excess of any of the preceding three years

Description : Which of the following is most likely to be considered a risk factor relating to fraudulent financial reporting? a. Low turnover of senior management. b. Extreme degree of competition within the ... various operating subsidiaries. d. Sales goals in excess of any of the preceding three years

Last Answer : Extreme degree of competition within the industry.

A typical objective of an operational audit is to determine whether an entity's a. Internal control structure is adequately operating as designed b. Operational information is in accordance with generally accepted accounting principles. c. Specific operating units are functioning efficiently and effectively d. Financial statements present fairly the results of operations

Description : A typical objective of an operational audit is to determine whether an entity's a. Internal control structure is adequately operating as designed b. Operational information is in ... are functioning efficiently and effectively d. Financial statements present fairly the results of operations

Last Answer : Specific operating units are functioning efficiently and effectively

The auditor is most likely to presume that a high risk of fraud exists if a. The client is a multinational companythat does business in numerous foreigncountries.b. The client does business with severalrelated parties.c. Inadequate segregation of dutiesplaces an employee in a position toperpetrate and conceal thefts.d. Inadequate employee training results inlengthy EDP exception reports eachmonth

Description : The auditor is most likely to presume that a high risk of fraud exists if a. The client is a multinational company that does business in numerous foreign countries. b. The client ... perpetrate and conceal thefts. d. Inadequate employee training results in lengthy EDP exception reports each month

Last Answer : Inadequate segregation of duties places an employee in a position to perpetrate and conceal thefts

Which of the following is not required by PSA No. 315, "Consideration of Fraud in a Financial Statement Audit"? a. Conduct a continuing assessment of the risks of material misstatement due to fraud throughout the audit. b. Conduct a discussion by the audit team of the risks of material misstatement due to fraud. c. Conduct inquiries of the audit committee as to their views about the risks of fraud and their knowledge of any fraud or suspected fraud. d. Conduct the audit with professional skepticism, which includes an attitude that assumes balances are incorrect until verified by the audito

Description : Which of the following is not required by PSA No. 315, "Consideration of Fraud in a Financial Statement Audit"? a. Conduct a continuing assessment of the risks of material ... professional skepticism, which includes an attitude that assumes balances are incorrect until verified by the audito

Last Answer : Conduct the audit with professional skepticism, which includes an attitude that assumes balances are incorrect until verified by the audito

Which statement is correct regarding the relationship between internal auditing and the external auditor? a. Some judgments relating to the audit of the financial statements are those of the internal auditor. b. The external audit function's objectives vary according to management's requirements. c. Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external audit procedures. d. The external auditor is responsible for the audit opinion expressed, however that responsibility may be reduced by any use made of internal auditing

Description : Which statement is correct regarding the relationship between internal auditing and the external auditor? a. Some judgments relating to the audit of the financial statements are those of the ... opinion expressed, however that responsibility may be reduced by any use made of internal auditing

Last Answer : Certain aspects of internal auditing may be useful in determining the nature, timing and extent of external audit procedures.

After studying and evaluating a client's existing internal control, an auditor has concluded that the policies and procedures are well-designed and functioning as intended. Under these circumstances, the auditor would most likely a. Perform further control tests to the extent outlined in the audit program. b. Determine the control policies and procedures that should prevent or detect errors and fraud. c. Set detection risk at a higher level than would be set under conditions of weak internal control. d. Set detection risk at a lower level than would be set under conditions of weak internal control.

Description : After studying and evaluating a client's existing internal control, an auditor has concluded that the policies and procedures are well-designed and functioning as intended. Under these circumstances, the ... risk at a lower level than would be set under conditions of weak internal control.

Last Answer : Set detection risk at a higher level than would be set under conditions of weak internal control.

All of the following conditions are indicators of possible pressures on an entity except a. The industry in which the entity operates is declining. b. There is inadequate working capital due to declining profits or too rapid expansion. c. The client is heavily dependent on one or a few products or customers. d. There is a significant and prolonged understaffing of the accounting department

Description : All of the following conditions are indicators of possible pressures on an entity except a. The industry in which the entity operates is declining. b. There is inadequate working capital ... products or customers. d. There is a significant and prolonged understaffing of the accounting department

Last Answer : There is a significant and prolonged understaffing of the accounting department

These result from significant conditions, events, circumstances, actions or inactions that could adversely affect the entity’s ability to achieve its objectives and execute its strategies or through the setting of inappropriate objectives and strategies. a. Business failure b. Information risk c. Business obstacles d. Business risk

Description : These result from significant conditions, events, circumstances, actions or inactions that could adversely affect the entity's ability to achieve its objectives and execute its strategies or through the ... strategies. a. Business failure b. Information risk c. Business obstacles d. Business risk

Last Answer : Business risk

Which of the following matters would an auditor most likely consider when establishing the scope of the audit?a. Audit areas where there is a higher risk of material misstatement. b. The expected audit coverage, including the number and locations of the entity's components to be included. c. The entity's timetable for reporting, such as at interim and final stages. d. The discussion with the entity's management concerning the expected communications on the status of audit work throughout the engagement and the expected deliverables resulting from the audit procedures.

Description : Which of the following matters would an auditor most likely consider when establishing the scope of the audit? a. Audit areas where there is a higher risk of material misstatement. ... status of audit work throughout the engagement and the expected deliverables resulting from the audit procedures.

Last Answer : The expected audit coverage, including the number and locations of the entity's components to be included.

Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Description : Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Last Answer : Fees charged for services

Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Description : Which of the following will an auditor least likely discuss with the former auditors of a potential client prior to acceptance? a. Disagreements with management regarding accounting principles b. Integrity of management c. Fees charged for services d. Reasons for changing audit firms

Last Answer : Fees charged for services

Which of the following could be an example of fraud?a. Misappropriation of assets or group of assets. b. Errors in the application of the accounting principles. c. Clerical errors in accounting data underlying the financial statements. d. Misinterpretation of facts that existed when financial statements were prepared.

Description : Which of the following could be an example of fraud? a. Misappropriation of assets or group of assets. b. Errors in the application of the accounting principles. c. Clerical ... underlying the financial statements. d. Misinterpretation of facts that existed when financial statements were prepared.

Last Answer : Misappropriation of assets or group of assets

Management’s attitude toward aggressive financial reporting and its emphasis onmeeting projected profit goals most likelywould significantly influence an entity’scontrol environment when a. External policies established by partiesoutside the entity affect its accountingpractices. b. Management is dominated by oneindividual who is also a shareholder. c. Internal auditors have direct access tothe board of directors and the entity’smanagement. d. The audit committee is active inoverseeing the entity’s financialreporting policies

Description : Management's attitude toward aggressive financial reporting and its emphasis on meeting projected profit goals most likely would significantly influence an entity's control environment when a. External ... d. The audit committee is active in overseeing the entity's financial reporting policies

Last Answer : Management is dominated by one individual who is also a shareholder

The risk that the audit will fail to uncover a material misstatement is eliminated a. When the auditor has complied with generally accepted auditing standards. b. If client has good internal control. c. If client follows generally accepted accounting principles. d. Under no circumstances

Description : The risk that the audit will fail to uncover a material misstatement is eliminated a. When the auditor has complied with generally accepted auditing standards. b. If client has good internal control. c. If client follows generally accepted accounting principles. d. Under no circumstances

Last Answer : Under no circumstances

The risk that the audit will fail to uncover a material misstatement is eliminated a. When the auditor has complied with generally accepted auditing standards. b. If a client has strong internal controls. c. If a client follows generally accepted accounting principles. d. Under no circumstances

Description : The risk that the audit will fail to uncover a material misstatement is eliminated a. When the auditor has complied with generally accepted auditing standards. b. If a client has strong internal controls. c. If a client follows generally accepted accounting principles. d. Under no circumstances

Last Answer : Under no circumstances

Experience has shown that certain conditions in an organization are symptoms of possible management fraud. Which of the following conditions would not be considered an indicator of possible fraud? a. Managers are regularly assuming subordinates' duties b. Managers are subject to formal performance reviews on a regular basis. c. Managers are dealing in matters outside their profit center's scope d. Managers are not complying with corporate directives and procedures

Description : Experience has shown that certain conditions in an organization are symptoms of possible management fraud. Which of the following conditions would not be considered an indicator of possible fraud? ... their profit center's scope d. Managers are not complying with corporate directives and procedures

Last Answer : Managers are subject to formal performance reviews on a regular basis.

Which of the following most accurately summarizes what is meant by the term “material misstatement?” a. Fraud and direct-effect illegal acts. b. Fraud involving senior management and material fraud. c. Material error, material fraud, and certain illegal acts. d. Material error and material illegal acts.

Description : Which of the following most accurately summarizes what is meant by the term material misstatement? a. Fraud and direct-effect illegal acts. b. Fraud involving senior management and material fraud. ... error, material fraud, and certain illegal acts. d. Material error and material illegal acts.

Last Answer : Material error, material fraud, and certain illegal acts.

Which of the following characteristics most likely would heighten an auditor’s concern about the risk of intentional manipulation of financial statements? a. Turnover of senior accounting personnel is low. b. Insiders recently purchased additional shares of the entity’s stock. c. Management places substantial emphasis on meeting earnings projections. d. The rate of change in the entity’s industry is slow.

Description : Which of the following characteristics most likely would heighten an auditor's concern about the risk of intentional manipulation of financial statements? a. Turnover of senior accounting personnel is low. b ... meeting earnings projections. d. The rate of change in the entity's industry is slow.

Last Answer : Management places substantial emphasis on meeting earnings projections.

In which circumstance is a CPA firm's independence most likely to be impaired? a. An individual on the audit has a close relative who is a receptionist for the client. b. The father of the audit senior holds a material financial interest in the client of which the senior is unaware. c. The spouse of a staff member on the audit has an immaterial common stock investment in the audit client. d. The partner in charge of the office's compensation is affected by office profitability, a portion of which arises from this audit

Description : In which circumstance is a CPA firm's independence most likely to be impaired? a. An individual on the audit has a close relative who is a receptionist for the client. b. The father of ... of the office's compensation is affected by office profitability, a portion of which arises from this audit

Last Answer : The spouse of a staff member on the audit has an immaterial common stock investment in the audit client