Threats to Auditor Independence Can Come from Various Sources

question 41

Multiple Choice

Threats to auditor independence can come from various sources.Which of these is referred to in the Code of Ethics as a self-review threat?

• A)The possibility of potential employment with the audit client.
• B)Preparation of original data used to generate a financial statement that is the subject matter of the audit engagement.
• C)Concern on the part of the auditor about the possibility of losing the engagement.
• D)Pressure to reduce inappropriately the extent of work performed in order to reduce fees.

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Definitions:

Investing Activities

Investing activities include transactions involving the acquisition or disposal of non-current assets, such as property, plant, and equipment, or investment securities, which are reflected in a company's cash flow statement.

Cash Receipts

Cash receipts refer to the total amount of money received by a business or organization during a specific period, including all forms of currency, checks, and electronic transfers received from customers or clients.

Free Cash Flow

Net cash provided by operating activities adjusted for capital expenditures and dividends paid.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.