When there are substantial unpaid fees outstanding from previous audit work:
A) independence can be compromised if the unpaid fees take on the character of a loan.
B) the audit opinion should be withheld.
C) the auditor should seek removal from office.
D) a fee premium can be applied to the current audit.

Question

Quizplus · Accepted Answer

According to the International Ethics Standards Board for Accountants (IESBA), when substantial unpaid fees are outstanding from previous audit work, the independence of the auditor can be compromised if the outstanding fees take on the character of a loan. This is because the independence of the auditor may be threatened if they are in a position where they could be perceived to owe a debt of gratitude to their client. Therefore, it is important for the auditor to carefully evaluate the situation and ensure that any outstanding fees do not compromise their independence.

When There Are Substantial Unpaid Fees Outstanding from Previous Audit