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Financial & Managerial Accounting
Found in: Page 29
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Question: How do ethics rules affect auditors’ choice of clients?

An auditor is a person who checks and verifies the financial records of the business. Ethical rules require auditors to avoid auditing for clients in which they have invested.

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Step by Step Solution

Step 1: Definition of Auditor

Auditor refers to the person who has the authorization to review and check the accuracy of financial records of the company.

Step 2: Ethics rules affect auditors’ choice of clients

If an auditor follows ethical rules, then the auditors avoid auditing for clients where they have invested directly, or the clients calculates the fees of the auditor according to the financial records of the company. This will prevent others from doubting the reliability or the quality of the report prepared by the auditor.

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