Which of the following statements is correct regarding auditor independence in fact and in appearance? O The auditor should be independent both in fact and in appearance. The auditor should be independent in fact but not in appearance. O The auditor should be independent in appearance but not in fact. When the auditor does not challenge an inappropriate journal entry made by the client in order to keep the client for future audits, this is an example of loss of independence in appearance.

Which of the following statements is correct regarding auditor independence in fact and in appearance? O The auditor should be independent both in fact and in appearance. The auditor should be independent in fact but not in appearance. O The auditor should be independent in appearance but not in fact. When the auditor does not challenge an inappropriate journal entry made by the client in order to keep the client for future audits, this is an example of loss of independence in appearance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Roger Royce, CPA, has encountered a situation that he thinks may pose a threat to his independence with respect to Watson, Incorporated an audit client. The situation is not addressed by an independence rule or regulation. Using the AICPA Conceptual Framework for Independence Standards, describe how Royce can determine whether the threat truly impairs his independence.
Which of the following statements is true? Select one: a. If evidence is subjective, it cannot be reliable b. Evidence must be relevant to all of the audit objectives c. Evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence. d. The persuasiveness of evidence can be evaluated after considering its sufficiency
The attorney's refusal to reply to the audit inquiry is a scope limitation that may affect the audit report. True False
V2. If a lawyer refuses to furnish corroborating information regarding litigation, claims, and assessments. the auditor should: disclose this fact in a footnote to the financial statements. seek to obtain the corroborating information from management. C) consider the refusal to be a scope limitation. D) honor the confidentiality of the client-lawyer relationship.
How should a successor auditor respond to a client's refusal to permit communication with the predecessor auditor?
From the options given below which of the following is not the reason of inherent limitation of audit? a. Limitation in accounting system O b. Use of human judgment O c. Poor planning O d. Human errors
Considering the work of experts is one of the factors of audit planning. Which of the following statements is incorrect concerning the use of the work of experts? a. An expert under employ by the client cannot be used for purposes of the auditor’s work because doing so would the rules on objectivity and independence. b. An auditor may use an expert in the determination of physical characteristics relating to inventories c. In the context of PSAs, an expert is a person possessing a high degree of skill or knowledge in fields outside auditing and accounting. d. Professional competence and reputation are some of the major considerations in selecting an expert
when the auditor lack independence he or she will issue disclaimer opinion Select one: True False
4
Audit evidence obtained through inquiry of management about proper segregation of custodianship and recordkeeping functions is less reliable than evidence acquired through the auditor's personal observation. TRUE OR FALSE? WHY?
In deciding upon the acceptable risk of incorrect acceptance for an account, an auditor considers each of the following except a. Audit risk. b.Tolerable error. c.The risk that internal controls fail to detect material misstatements that have occurred. d. The risk that analytical procedures and other tests fail to detect material errors that occur and that are not detected by internal control.