An Auditor's Independence Would Not Be Considered Impaired If She

question 91

Multiple Choice

An auditor's independence would not be considered impaired if she or he had

• A) Owned common stock of the audit client but sold it before the company became a client.
• B) Sold short the common stock of an audit client while working on the audit engagement.
• C) Served as the company's treasurer for six months during the year covered by the audit but resigned before the company became a client.
• D) Performed the bookkeeping and financial statement preparation for the company, which had no accounting personnel and for which the president had no understanding of accounting principles.

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Definitions:

Promisee

The individual or entity to which a promise or agreement is made.

Purely Incidental

Occurring by chance and of secondary importance, without direct relevance to the main issue.

Breach of Contract

The failure to perform as specified in a contract without a lawful reason.

Donee Beneficiary

A third party who benefits from a contract in which a promisee promises to perform certain actions that benefit this third party.