The Ethical Rules State That Independence of the External Audit

question 11

Multiple Choice

The ethical rules state that independence of the external audit firm is considered to be impaired if:

• A) the audit firm provides management advisory services to the client.
• B) the audit partner purchases the client's product at normal retail prices.
• C) the audit firm has served as the external auditor for many years.
• D) a near relative of one of the partners is the beneficial owner of shares forming a material part of the share capital of the client.

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Definitions:

Long-term Loan

A loan with a repayment period typically extending beyond one year, used for financing significant investments or acquisitions.

Office Supplies

Items and materials used in offices for daily operations, such as paper, pens, and binders.

Partnership

A certified business model where two or more co-owners share in the management and the financial gains.

Unlimited Liability

A legal structure in some businesses where owners are personally responsible for all of the company's debts, exposing personal assets to business creditors.