Audit independence in fact is most clearly lost when
a. A public accounting firm audits competitor companies in the same industry (e. g., Coca- Cola and Pepsi).
b. An auditor agrees to the argument made by the client’s financial vice president that deferring losses on debt refinancing is in accordance with generally accepted accounting principles.
c. An audit team fails to discover the client’s misleading omission of disclosure about permanent impairment of asset values.
d. A public accounting firm issues a standard unmodified report, but the reviewing partner fails to notice that the assistant’s observation of inventory was woefully incomplete.