(i) Agency theory is based on the view that A. The purpose of corporate governance (CG) should be to satisfy (as far as possible) the objectives of all stakeholders. B. Boards of directors are considered as important mechanism for reducing transaction costs associated with environmental interdependency. C. Corporate governance will be to employ or design techniques or systems that can secure the interests and values of the management. D. The system of CG should be designed to minimise agency problems & costs. (ii) Which one of the following statements is not a relevant reason for an accountant to liaise with their predecessor when accepting a professional assignment? A. It is a matter of professional etiquette B. To avoid the appearance of solicitation C. To determine whether the professional fees charged were adequate to avoid threats to due care D. To identify if there are professional reasons why the appointment should not be accepted. (iii) Which threat can possibly arise if an external auditor provides both audit and non-audit service to a client A. Intimidation B. Advocacy C. Self-interest D. Self-review
Question 1 2020
(i) Agency theory is based on the view that
A. The purpose of corporate governance (CG) should be to satisfy (as far as possible) the objectives of all stakeholders.
B. Boards of directors are considered as important mechanism for reducing transaction costs associated with environmental interdependency.
C. Corporate governance will be to employ or design techniques or systems that can secure the interests and values of the management.
D. The system of CG should be designed to minimise agency problems & costs.
(ii) Which one of the following statements is not a relevant reason for an accountant to liaise with their predecessor when accepting a professional assignment?
A. It is a matter of professional etiquette
B. To avoid the appearance of solicitation
C. To determine whether the professional fees charged were adequate to avoid threats to due care
D. To identify if there are professional reasons why the appointment should not be accepted.
(iii) Which threat can possibly arise if an external auditor provides both audit and non-audit service to a client
A. Intimidation
B. Advocacy
C. Self-interest
D. Self-review
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