The Failure of Many Auditing Firms to Raise Red Flags

question 38

Multiple Choice

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors, except

• A) the desire to get future auditing contracts from the company.
• B) the desire to get consulting work from the company because most audit firms also do consulting work.
• C) the fact that auditors are appointed by the firm.
• D) the failure of U.S. audit firms to follow internationally accepted accounting standards.

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Definitions:

Reasonable Pay

Compensation that is fair and appropriate for the work performed, considering factors like industry standards, experience, and geographic location.

Up-To-Date Skills

The possession of current and relevant abilities or knowledge that aligns with the latest developments in a particular field.

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The most noticeable layers of diversity in an individual, such as age, race, ethnicity, gender, and physical abilities.

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The beliefs and perceptions an individual holds about themselves, their abilities, and their appearance.