The Auditor Must Be Independent of the Auditee Unless

question 33

Multiple Choice

The auditor must be independent of the auditee unless

• A) The lack of independence does not influence his or her professional judgment.
• B) Both parties agree that the independence issue is not a problem.
• C) The lack of independence is insignificant.
• D) None of the above-the auditor cannot lack independence.

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Definitions:

Consolidated Revenues

The total revenues recognized from all sources, including subsidiaries, by a parent company during a reporting period, after the elimination of any inter-company transactions.

Inventory Purchase Price

The amount paid to acquire inventory before any discounts or allowances.

Outstanding Voting

Refers to shares of a corporation that are currently owned by investors and have voting rights at shareholder meetings.

Intra-entity Gross Profit

The profit generated from transactions conducted within different parts of the same company.