Question: Which of the following factors most likely would cause an auditor to decline to accept a new audit engagement?

Which of the following factors most likely would cause an auditor not to accept?

Which of the following factors most likely would cause an auditor not to accept a new audit engagement? An inadequate understanding of the entity’s internal controls. The close proximity to the end of the entity’s fiscal year. Concluding that the entity’s management probably lacks integrity.

Which of the following factors would most likely cause a CPA not to accept an audit engagement?

Which of the following factors would most likely cause a CPA to decide not to accept a new audit engagement? Management’s disregard for internal control. Which of the following matters is generally included in an auditor’s engagement letter?

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What factors should an auditor consider prior to accepting an engagement?

Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client’s management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or …

Under what circumstances the auditor should not accept an audit engagement?

Audit engagement should not be accepted under following circumstances: Serious limitations on scope. Financial reporting framework is unacceptable. Management refuses to provide agreement that it acknowledges its responsibility as regards financial statements.

What is the difference between a compilation review and audit?

A compilation is a basic summary of your company’s financial statements written by a CPA using data provided by your company. Unlike a review or an audit, this method provides no assurance. There are no tests performed, and the auditor does not examine any internal controls.

Which of the following matters is generally included in auditors engagement letter?

The terms of the engagement should be documented in an engagement letter that states the following: (1) objective and scope of the audit, (2) responsibilities of the auditor and management, (3) inherent limitations of the audit and internal control, (4) the financial reporting framework, and (5) the expected form and …

Which of the following audit risk components may be assessed in quantitative terms?

All 3 components of audit risk may be assessed in quantitative terms such as percentages or in nonquantitative terms that range, for example, from high to low. A Risk of failing to discover material misstatements. B Assurance provided by substantive procedures. C Risk of misapplying auditing procedures.

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Which of the following most likely would be included in an audit engagement letter?

An auditor’s engagement letter most likely will include: Management’s acknowledgment of its responsibility for maintaining effective internal control.

Which of the following audit evidences obtained would be most reliable?

Auditor’s direct knowledge — Evidence obtained directly by the auditor through physical examination, observation, computation and inspection is more reliable than information obtained indirectly.

What are the 4 phases of an audit process?

Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review. Client involvement is critical at each stage of the audit process.

What is a precondition for an audit?

Preconditions for an audit – The use by management of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of management and, where appropriate, those charged with governance to the premise2 on which an audit is conducted. 5.

When should an auditor reject engagement?

In relation to the final bullet point, if management impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement, the auditor should decline the audit engagement if the limitation could result in the auditor having to disclaim the opinion on the financial statements.

Which is the 4 steps in accepting an audit engagement?

Each audit engagement is unique, but most share the basic steps of preparation, planning, field testing, and audit procedures, as well as subsequently rendering the audit opinion.

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