In Addition to Direct Impacts on the Financial Statements,the Auditor

question 45

Multiple Choice

In addition to direct impacts on the financial statements,the auditor also needs to consider indirect effects.An assessment of client objectives and strategies can reveal issues that could lower income or cause contingent liabilities.Which of the following could cause lost sales,increases in warranty expenses,and product liability claims?

• A)poor product quality
• B)excessive advertising
• C)ineffective projections
• D)inaccurate budgets

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Definitions:

Conformity Pressures

The influence exerted by a group that encourages individuals to change their attitudes, values, or behaviors to align with group norms.

Asch

Refers to Solomon Asch, known for his research on conformity, specifically the experiments demonstrating the influence of group pressure on opinions.

Crutchfield Situation

A technique used in social psychology experiments to study conformity, where individuals must make judgments while being exposed to the presumed opinions of others.

Asch Situation

An experiment by Solomon Asch that demonstrated the power of conformity in groups, where individuals often agree with a consensus even if it is clearly incorrect.