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uring a meeting between the senior management of Delco Company and their external auditors, Jamboree CPAs, the issue as been raised by one of the audit partners as to the high level of turnover in some of the client's executive positions. It has als een noted by another audit partner that Delco's business structure, which has recently been overhauled and restructured is ore complex than before, with more reporting lines than before. Which of the following statements best describes why the ternal auditors may be concerned about these issues? It is likely that with management turnover being at a high level, the auditors will likely be asked to take on the role of management in some capacity. This will create a conflict of interest and resultant loss of independence for the auditors, who are thus more likely to simply issue a disclaimer of opinion on the client's financial statements. The external auditor may be concerned that with a high level of turnover for people in key positions, it may be more challenging for the auditor to obtain the necessary documentation and assurances that are required as part of the audit. This makes the issuance of a qualified or even a disclaimer of opinion more likely. The external auditors may be concerned that high management turnover is indicative of problems within the firm that the auditor may be unaware of. In addition, the added complexity introduced by the new reporting hierarchy may provide increased opportunities for error or fraud. The external auditors are likely to be concerned about the high levels of management turnover, as it is likely that fraud is occurring which is precipitating this high turnover level. The auditor is also likely to presume that the reporting hierarchy restructure has been purposefully introduced to cover the tracks of those who may be committing fraud

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