According to the Profession's Ethical Standards, an Auditor Would Be

question 90

Multiple Choice

According to the profession's ethical standards, an auditor would be considered independent in which one of the following instances?

• A) The auditor is also a solicitor advising the client.
• B) The client owes the auditor fees for the last two annual audits.
• C) An employee of the audit firm acts as the honorary treasurer for a charity that is an audit client.
• D) The auditor's main bank account is held at a client financial institution.

---

Definitions:

Principle of Exceptions

A management principle focusing attention and resources on areas that deviate significantly from standards or expectations.

Standard Costs

Predetermined costs for materials, labor, and overhead used as a benchmark for evaluating actual production costs.

Factory Overhead Cost Variance

The difference between the actual factory overhead costs incurred and the expected (or budgeted) overhead costs based on standard cost accounting.

Flexible Factory Overhead Budget

A budget that adjusts overhead costs in response to changes in actual production or activity, allowing for more accurate costing.