Which of the Following Statements Regarding Independence with Respect to Accounting

question 22

Multiple Choice

Which of the following statements regarding independence with respect to accounting and other services is FALSE?

• A)If a professional accountant (PA)performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,the PA cannot be considered independent for assurance services.
• B)If a PA performs the bookkeeping and makes accounting decisions for a company and the management does not know enough about the financial statements to take primary responsibility for them,it might be perceived that the PA has both prepared the financial statements or other data and given an audit report or other assurance on his or her own work.
• C)The PA cannot perform the bookkeeping for a company and also provide assurance services.
• D)The PA can counsel the client management about the accounting principle choices,but in the final analysis the management must be able to say,"These are our financial statements (or other data);we made the choices of accounting principles;we take primary responsibility for them."

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Definitions:

Theorists

Individuals who formulate theories or concepts in a particular field of study or aspect of human behavior.

Organic Structures

Organic structures refer to flexible, adaptive organizational structures that are characterized by low levels of formalization, decentralized decision-making, and a broad scope of control.

Mechanistic

Pertains to organizational structures that are highly formalized and centralized, with strict hierarchies and clear, rigid procedures.

Authority

The power or right to give orders, make decisions, and enforce obedience, often established by a position in a hierarchical organization.