Status as a "Covered Member" Is Important in Determining Independence

question 22

Multiple Choice

Status as a "covered member" is important in determining independence because CPAs who are classified as a "covered member" lack the independence to conduct an audit if:

• A) They have an indirect ownership interest in even a single share of stock outstanding in an audit client
• B) They refuse to subordinate their best judgment to the wishes of their client
• C) Their college-age, dependent child works in the client's warehouse during the summer as a shipping clerk
• D) Their sister is an attorney who works as the company's General Counsel

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Definitions:

Stimulus-Response

A model or theory in psychology and marketing that describes how an individual or customer reacts to a stimulus (such as an advertisement) with a particular response.

Model

A representation, often simplified, that is used to demonstrate or explain complex processes, structures, or concepts.

Buyer Behavior

The actions and decision-making processes of individuals or groups as they purchase goods or services.

Organizational Buying Process

The problem-solving procedure the firm uses to meet its goals and objectives as it relates to making purchases.