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iStudy
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Posted: 09 Jan 2011 at 20:28 \| IP Logged

Can someone help me understand this question?

CPA-04791

Under the ethical standards of the profession, which of the following positions would be considered a position of significant influence in an audit client?

a. A marketing position related to the client's primary products.

b. A policy-making position in the client's finance division.

c. A staff position in the client's research and development division.

d. A senior position in the client's human resources division.

Choice "b" is correct. Rule 101 of the Code of Conduct requires auditors to be independent of their clients. Independence is not impaired by an immediate family member's employment with a client provided that (s)he is not in a key position. Having a policy-making position in the client's finance division would clearly be a key position.

Choices "a", "c", and "d" are incorrect. Having a marketing position, a position in research and development or a position in human resources would not be directly related to financial activities.

I understand that a policy-making position in the client's finance division would clearly be a key position. However, I'm pretty sure that a senior position in the client's human resources division would impair independence.

Can someone clarify why the answer can't be d?

Thank you in advance!

mcohen
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Posted: 09 Jan 2011 at 23:07 \| IP Logged

I think this is an example of "best" answer. The "policy-
making" part of the question gives it away as the right
answer. Also the finance department will have a much more
direct role in the preparation of the FS's than HR.

iStudy
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Posted: 10 Jan 2011 at 01:58 \| IP Logged

Thanks for clarifying! It makes sense when you explain it. It seems like there are a lot of these "best" answer questions.

palal9923
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Posted: 10 Jan 2011 at 21:06 \| IP Logged

yea the whole exam is basically "best" answers wait until you get to the assertions material...

YoungRamsis
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Posted: 13 Jan 2011 at 17:25 \| IP Logged

"D" will be the correct answer if answer "B" is not there,
always remember, you need to select the BEST answer, and specially in AUD you gonna see 2 correct answers in a lot of mcq's but one of them is better than the other, like this question you posted, I agree that senior HR is considered managerial and should impair the independence, but when you see a policy making position in the FINANCE division, that looks like a position that is directly affecting the FINANCIAL STATEMENT and that should be more influencing than HR

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