An Audit Firm Is Not Considered Independent When It Performs

question 69

Multiple Choice

An audit firm is not considered independent when it performs which of the following services for a publicly traded audit client?

• A)Tax return preparation as approved by the board of directors.
• B)Basic accounting record keeping and financial statement preparation.
• C)Accounting information system design and implementation.
• D)Both B and C.
• E)None of the above.

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Definitions:

McGregor

Refers to Douglas McGregor's Theory X and Theory Y, which describe two contrasting models of workforce motivation and management.

Theory X

Assumes people dislike work, lack ambition, are irresponsible and prefer to be led.

Bureaucracy

An organizational structure characterized by formal rules and regulations, a clear hierarchy, and detailed procedures and protocols.

Division of Labour

The allocation of different tasks to different people or groups in an organization or economy, aimed at increasing efficiency and productivity.