Reference no: EM132782889

Problem 1. In which of the following situations would an auditor be in violation of the ethical rules in determining his or her fee?

A. A fee based on the time spent on the engagement.

B. A fee based on the nature of the service rendered and the auditor's particular expertise instead of the actual time spent on the engagement

C. A fee based on whether the auditor's report on the client's financial statements results in the approval of bank loan

D. A fee based on the fee charged by the prior auditor.

Problem 2. Which of following threats to independence occurs when an auditor is auditing a company where a former audit partner, from the auditor's firm, is now the Chief Financial officer of the company?

A. familiarity threat

B. self-review threat

C. advocacy threat

D. self-interest threat

Problem 3. Which of following threats to independence occurs when an auditor help a client to negotiate a loan with a bank?

A. integrity threat

B. there is no threat to audit independence from this activity

C. advocacy threat

D. self-interest threat

Problem 4. Which of the following represents a risk of financial misstatement at the financial report level?

A. The client has recently signed a contract with an engineering company to commence work on a new technologically advanced manufacturing machine.

B. The client has recently replaced the entire accounting department following mass resignation of staff in the department.