Ii decline or terminate the audit engagement a i only

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II. Decline or terminate the audit engagement. A. I only B. II only C. Neither I nor II D. Either I or II 35. Financial interests may be held through an intermediary (for example, a collective investment vehicle, estate or trust). When control over the investment vehicle or the ability to influence investment decisions exists, the code defines that financial interest to be a/an A. Direct financial interest. B. Material direct financial interest. C. Indirect financial interest. D. Material indirect financial interest. 36. A loan, or guarantee of a loan, to the firm from an audit client that is a bank or a similar institution, would not create a threat to independence provided I. The loan, or guarantee, is made under normal lending procedures, terms and requirements. II. The loan is immaterial to both the firm receiving the loan and the audit client. A. I only
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B. II only C. Neither I nor II D. Both I and II 37. A close business relationship between a firm or a member of the audit team, or a member of that individual’s immediate family, and the audit client or its management may create A. Self-interest and intimidation threats B. Self-review and familiarity threats C. Advocacy and self-review threats D. Self-interest and self-review threats Page 7 38. When an immediate family member of a member of the assurance team is a director, an officer, or an employee of the assurance client in a position to exert direct and significant influence over the subject matter information of the assurance engagement, or was in such a position during the period covered by the engagement, the threats to independence can only be reduced to an acceptable level by A. Where possible, structuring the responsibilities of the assurance team so that the professional does not deal with matters that are within the responsibility of the immediate family member. B. Withdrawing from the assurance engagement. C. Removing the individual from the assurance team. D. Discussing the issue with those charged with governance, such as the audit committee. 39. Which of the following threats to independence is created when a member of the assurance team participates in the assurance engagement while knowing, or having reason to believe, that he is to, or may, join the assurance client sometime in the future? A. Intimidation threat B. Self-interest threat C. Self-review threat D. Familiarity threat 40. Which of the following would not generally create a threat to independence? A. The purchase of goods and services from an assurance client by the firm (or from a financial statement audit client by a network firm) or a member of the assurance team provided that the transaction is in the normal course of business and on an arm’s length basis. B. A partner or employee of the firm or a network firm serves as Company Secretary for a financial statement audit client.
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