Which of the Following Best Describes the Fundamental, Underlying Reason

question 16

Multiple Choice

Which of the following best describes the fundamental, underlying reason for why there is demand for an independent auditor to report on financial statements?

• A)A management fraud may exist and it is more likely to be detected by auditors if they are independent.
• B)Different interests may exist between the company preparing the statements and the parties using the statements.
• C)A misstatement of account balances may exist and it is the independent auditor's responsibility to ensure that financial statements are not misstated.
• D)A poorly designed internal control system may be in place.

---

Definitions:

Negative Consequences

Adverse outcomes or effects resulting from actions, events, or decisions, which can impact individuals, groups, or societies.

Mental Labor

Work that involves cognitive effort and activities that require thinking, analyzing, and decision-making.

Manual Labor

Physical work done by people, especially in contrast to work done by machines or requiring mental effort.

Prestige

The value with which different groups of people are judged.