Which of the Following Would Result in the Impairment of the Auditor's

question 135

Multiple Choice

Which of the following would result in the impairment of the auditor's independence?

• A) The auditor does not have any immediate family members employed by the client.
• B) The audit fee is based on a percentage of the company's net income for the year.
• C) The auditor does not have any investment in the client's business.
• D) The auditor serves on Dayton Inc.'s board of directors along with the client's CEO.

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Definitions:

Psychological Size

Psychological size describes the perceived influence or impact of an individual's personality or presence on others.

Perceived Importance

The level of significance or value that an individual assigns to a topic, object, or idea, based on personal judgment or perspective.

Democratic

Pertaining to a form or style of leadership based on equality, shared power, group decision making, and the greatest good for the greatest number.

Participative Leadership

A leadership style where decision making is shared among group members, valuing their input and engagement in setting goals and solving problems.