In the absence of regulation,for auditing to be an effective strategy for reducing the costs of attracting funds,the auditor must:
A) be perceived to be truly independent and the accounting methods employed must be sufficiently well-defined.
B) have been auditing the company for at least the last five years.
C) be formally registered under the Registered Auditors Act 1998.
D) belong to one of the major ('Big 4') global accounting firms.

Question

Quizplus · Accepted Answer

Regulation provides some level of assurance to investors and other stakeholders that companies are using proper accounting practices and that auditors are truly independent. Without regulation, the perception of auditor independence and clearly defined accounting methods becomes even more important for investors to trust the financial statements of a company. Therefore, choice A is the best option. The other options do not ensure the effectiveness of auditing in reducing the costs of attracting funds.

In the Absence of Regulation,for Auditing to Be an Effective