Why Must an Auditor Act Independently of Any Interest of the Company

question 64

Multiple Choice

Why must an auditor act independently of any interest of the company that has retained him or her to perform the audit?

• A) The auditor must maintain client privilege.
• B) The auditor fulfills a public function.
• C) The auditor must maintain client confidentiality.
• D) The auditor has a duty of care.

---

Definitions:

Amortized Cost Basis

A financial calculation method that gradually writes off the initial cost of an asset over time.

Comprehensive Income

An all-encompassing measure of income that includes all changes in equity during a period except those resulting from investments by and distributions to shareholders.

Credit Loss

A reduction in the projected future cash flows from a loan or other financial instrument due to the borrower's inability to make payments as agreed.

Fair Value

An accounting term referring to the estimated worth of an asset or liability based on current market conditions.