An Auditor Is About to Commence a Recurring Annual Audit

question 20

Multiple Choice

An auditor is about to commence a recurring annual audit engagement. The continuing auditor's independence would ordinarily be considered to be impaired if the prior year's audit fee:

• A)was unusually large.
• B)has not been paid and will not be paid for at least twelve months.
• C)has not been paid and the client has filed a voluntary petition for bankruptcy.
• D)was renegotiated during the prior year audit based on the need for expanded testing.

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Definitions:

Desirable Behavior

Actions or conduct that are considered positive, beneficial, or attractive according to social, cultural, or organizational standards.

Similar Settings

Environments or contexts that share common characteristics, features, or conditions.

Withdrawal

The act of removing oneself from participation in something, such as withdrawing money from a bank or withdrawing from social activities.

Likelihood

The probability or chance that a particular event will occur.