When the Auditor Is Not Independent with Respect to a Client

question 13

Multiple Choice

When the auditor is not independent with respect to a client, what must the auditor do?

• A) Not accept an audit engagement.
• B) Include a separate paragraph in the audit report stating the lack of independence.
• C) Provide a review report.
• D) Report the non-compliance to the AICPA.

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Definitions:

Dendrites

The branching projections of a neuron that act to conduct the electrochemical stimulation received from other neural cells to the cell body, or soma, of the neuron from which the dendrites project.

Reserve Capacity

The extra amount of functional capability that an organism or system can draw upon when needed.

Homeostasis

The biological process by which living organisms maintain a stable internal environment despite changes in the external environment.

Senescence

The biological process of aging, characterized by the gradual decline in physiological functions and increased vulnerability to diseases.