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.

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

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

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.