The Failure of Many Auditing Firms to Raise Red Flags

question 38

Multiple Choice

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors, except

• A) the desire to get future auditing contracts from the company.
• B) the desire to get consulting work from the company because most audit firms also do consulting work.
• C) the fact that auditors are appointed by the firm.
• D) the failure of U.S. audit firms to follow internationally accepted accounting standards.

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Definitions:

Inventory Costs

Expenses associated with holding and managing inventory, including costs related to storage, insurance, taxes, and depreciation.

Logistics Manager

A professional responsible for overseeing the logistics operations within an organization, ensuring efficient transportation and distribution of goods.

Warehouse

A large building where raw materials or manufactured goods may be stored before their distribution for sale.

Trucks

Motor vehicles designed for transporting cargo, varying in size and capacity, and playing a crucial role in overland freight movement.