The Audit Failures of Both Enron and WorldCom Were Examples

question 22

Multiple Choice

The audit failures of both Enron and WorldCom were examples in which the leadership responsibilities for quality work within the accounting firm were overshadowed by fears that losing a key client would

• A)result in shareholder losses from reduced company profitability.
• B)require additional audit procedures and increase the fees paid by the companies to the accounting firm.
• C)negatively influence the results of the firm's inspection.
• D)negatively impact individual auditors' performance evaluations.

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Definitions:

Herring

A type of fish that is widely used for food and is important in many cultural dishes.

Opportunity Cost

The financial sacrifice of the next preferable alternative when choosing.

Cell Phones

Electronic devices used for mobile telecommunications over a cellular network of specialized base stations.

Herring

A type of fish found in both the Atlantic and Pacific Oceans, commonly used for food.