Final answer:
The manager of the auditing team accepting a position as Controller of Knight Alloys during an audit exemplifies a conflict of interest, compromising the required independence and potentially affecting the integrity of the audit results.
Step-by-step explanation:
During the audit of Knight Alloys, the manager of the auditing team accepted a position as Controller of Knight Alloys. This is an example of a conflict of interest. The auditing manager might face a situation where their personal interests could influence their professional judgment. It is essential for auditors to maintain independence both in fact and in appearance when conducting an audit to ensure unbiased and objective audit opinions. When an auditor becomes a part of the management team of the company they were auditing, it undermines this independence and raises questions about the integrity of the audit results.