When a Firm Undertakes Both Internal and External Auditing Services

question 31

Multiple Choice

When a firm undertakes both internal and external auditing services for the same entity, which of the following must be applied for the external auditor to demonstrate independence?

• A) The external auditor should gather sufficient appropriate audit and rely no more than usual on internal audit work.
• B) The external auditor should not assume the role of management when undertaking internal audit services.
• C) Any recommendations made by auditors are for implementation by management rather than the auditor.
• D) All of the above

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Definitions:

Descriptive Norms

Refer to perceptions of how people typically behave in a given context, which can influence individual behavior by setting a standard of what is common or normal.

Injunctive Norms

Social norms that dictate what is perceived as approved or disapproved behavior within a given culture or social group.

Charismatic Leader

A leader who inspires followers through their personal charm, persuasion, and dynamic personality, often able to induce enthusiasm and devotion.

Economic Depression

An extended period of significant decline in economic activity across a region or country, marked by high unemployment, low production, and reduced consumer spending.