The Recommendation of Appointment and Review of External Auditors by the Audit

question 2

Multiple Choice

The recommendation of appointment and review of external auditors by the audit committee is an example of

• A) safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation.
• B) safeguards reducing the risk of conflict of interest between an auditor and management.
• C) safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures.
• D) safeguards reducing the risk of conflict of interest created by the profession, legislation, or regulation, and safeguards reducing the risk of conflict of interest within a professional accounting firm's own systems and procedures.
• E) All of these are correct.

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Definitions:

Framing Effect

The tendency for people’s choices to be affected by how a choice is presented, or framed, such as whether it is worded in terms of potential losses or gains.

Potential Losses

Possible negative outcomes or detriments that could occur as a result of specific actions, decisions, or events.

Choices

The act of selecting between two or more possibilities, reflecting personal preference, values, or circumstances.

Availability Heuristic

The tendency to judge the probability of a type of event by how easy it is to think of examples or instances.