'The Auditor Should Not Assume That Management Is Dishonest, but the Possibility

question 38

Multiple Choice

'The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.' This is an example of:

• A) unprofessional behaviour.
• B) a rule in the joint Code of Professional Conduct.
• C) due diligence.
• D) an attitude of professional skepticism.

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Definitions:

Sole Proprietorship

A business ownership structure where a single individual owns, operates, and is responsible for all aspects of the business.

Personally Liable

The legal responsibility of an individual to compensate for debt or obligation from personal assets, not through corporate or shared assets.

Sole Proprietorship

A business structure where a single individual owns and operates the business, personally responsible for all its debts and liabilities.

Legal Structure

The way a business is organized legally, affecting liability, tax requirements, and regulatory obligations. Common forms include sole proprietorship, partnership, corporation, and LLC.