Under Ordinary Circumstances,both the CFO and CEO of a Particular

question 32

Multiple Choice

Under ordinary circumstances,both the CFO and CEO of a particular company authorize and sign check disbursements exceeding $10,000.However,when the CEO of this audit client is unavailable for an extended period due to her travel schedule,the client's CPA co-signs checks that exceed $10,000 only after these checks first have been authorized and signed by the client's CFO.The CPA:

• A) Has created a management participation threat that impairs his independence
• B) Has created an undue influence threat that impairs his independence
• C) Has created an advocacy threat that impairs independence, unless appropriate safeguards are put into place
• D) Should be commended for assisting the client and has not affected his independence

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Definitions:

Fraud in the Inducement

A deceitful practice to mislead someone into entering a contract, undermining the agreement's legitimacy.

Indorsers

Individuals or entities that sign the back of a negotiable instrument, such as a cheque or a promissory note, thereby endorsing it to another party.

Dishonor

To refuse to accept or pay a negotiable instrument when it is presented.

Drawee

The party named in a draft who is ordered to pay the money to the payee.