ABC Firm Are the Auditors of XYZ Company

question 15

Multiple Choice

ABC firm are the auditors of XYZ Company. The partner responsible for the audit has recently spent a week working with XYZ as a paid consultant on their internal control systems. The ethical principle that has been breached is:

• A) auditor independence.
• B) auditor appointment.
• C) auditor rotation.
• D) auditor competence.

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Capital

Financial assets or the financial value of assets, such as cash and goods, used by a business to produce goods or services and create wealth.

Future Benefits

Expected advantages or gains in the future, often considered in decision-making processes or investment analysis.

Retained Earnings

Profits that a company keeps after dividends have been paid out to shareholders, used for reinvestment in the business or to pay down debt.