Please answer with reason for all why the option is correct and why the other options are incorrect Please answer correct otherwise skip it During the external audit of Starbright Company, the external auditor has noted that the company has an extremely high turnover of employees. During a recent meeting, Starbright management has advised that the treasurer has recently left to take another position with a different company, and has asked the senior audit manager assigned to the audit to sign checks in an emergency capacity until a suitable replacement has been found. Which of the choices below best describe the problem with this situation? A. The audit manager may take advantage of this situation to write other checks for personal gain, and there may be no internal controls to detect this. B. The CPA authorizing disbursements of client funds, even in an emergency capacity may represent a threat to independence as the auditor is exercising authority on behalf of a client. C. The audit manager has been placed in a situation whereby a conflict of interest exists, and should withdraw from the engagement immediately. D. By writing checks on behalf of the client, the external auditor assumes responsibility for any bounced checks.
Please answer with reason for all why the option is correct and why the other options are incorrect
Please answer correct otherwise skip it
During the external audit of Starbright Company, the external auditor has noted that the company has an extremely high turnover of employees. During a recent meeting, Starbright management has advised that the treasurer has recently left to take another position with a different company, and has asked the senior audit manager assigned to the audit to sign checks in an emergency capacity until a suitable replacement has been found. Which of the choices below best describe the problem with this situation?
A. The audit manager may take advantage of this situation to write other checks for personal gain, and there may be no internal controls to detect this.
B. The CPA authorizing disbursements of client funds, even in an emergency capacity may represent a threat to independence as the auditor is exercising authority on behalf of a client.
C. The audit manager has been placed in a situation whereby a conflict of interest exists, and should withdraw from the engagement immediately.
D. By writing checks on behalf of the client, the external auditor assumes responsibility for any bounced checks.
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