When Auditors Lack Independence, Which of the Following Is True

question 6

Multiple Choice

When auditors lack independence, which of the following is true about the report on the entity's financial statements that should be issued?

• A)The auditors should disclaim an opinion and should state specifically that they are not independent.
• B)The auditors should disclaim an opinion but not mention that they are not independent.
• C)The auditors should issue an unqualified opinion with an explanatory paragraph stating that they are not independent.
• D)The auditors should issue a qualified opinion with an explanatory paragraph stating that they are not independent.

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Definitions:

Domestic Products

Goods and services that are produced within a country's borders and are intended for consumption in the same country.

Foreign Market

A market outside the company's home country where it conducts business activities or sells products.

Adaptations

Modifications or adjustments made to a product, strategy, or approach to better fit a specific market or set of requirements.

Subsidiary Control

The influence and regulatory mechanisms wielded by a parent company over its subsidiaries' operations and policies.