Multiple choice Question 1 During the audit of Strayer Corporation, senior auditor Martin James, CPA noted that the firm occupies office space at no charge, in an office building that is owned by a shareholder. This finding indicates the existence of :- A. Management Fraud B. Window dressing C. Related party transaction D. Weak internal control Question 2: Sometimes auditors discover a client's error that is smaller than materiality, however the error is still determined to be material due to qualitative reasons. All of the following are qualitative reasons for materiality except: A. The amount of the greater than planning materiality B. The error affects working capital that might disguise a violation of the debt agreement C. The error, if left uncorrected, would increase the bonus paid to management D. The error increases earnings per share. If the error is corrected, the firm will not meet the analyst consensus of earnings per share this quarter. Question 3 Marcel Escoffier, CPA, has requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. The prospective client's refusal to permit this will bear directly on Escoffier's decision concerning the:- A. Integrity of management B. Ability to establish consistency in application of accounting principles between years. C. Apparent scope limitation D. Adequacy of the Preplanned audit program