Preliminary Engagement

Which of the following would not be a consideration of a CPA firmin deciding whethertoaccept a new client?

• The client's financial ability

• The client's standing in the business community.

• The client's probability of achieving an unqualified opinion.

• The client's relations with its previous CPA firm.

Which of the following factors most likely would influence an auditor's determinationof theauditability of an entity's 3. financial statements?

• The complexity of the accounting system

• The adequacy of the accounting records

• The existence of related-party transactions

• The operating effectiveness of control procedures

The use by management of an acceptable financial reporting framework in the preparationofthe financial statements 4 and the agreement of management and, where appropriate, thosecharged with governance to the premise on which an audit is conducted pertains to

• Preconditions for an audit

• Premonitions for an audit

• Information asymmetry

• Superstitions for an audit

In making a decision whether to accept or reject an engagement, an auditor shouldconsiderthe following. except:

• Its competence

• Its ability to serve the client properly PRIME

• Its independence

• The integrity of the predecessor auditor

A successor auditor is required to attempt communication with the predecessor auditor priorto

• Performing test of controls

• Accepting the engagement.

• Testing beginning balances for the current year

• Proposing for the audit engagement.

Tanggol requested permission to communicate with the predecessor auditor andreviewcertain portions of the predecessor auditor's working papers. The prospective client's refusal topermit this will bear directly on Tanggol's decision concerning the:

• Adequacy of the preplanned audit program

• Ability to establish consistency in the application of accounting principles between years

• Apparent scope limitation.

• Integrity of management

With regard to the integrity of a client, matters that the firm considers include the following: A. The identity and business reputation of the client's principal owners, key management, relatedparties and those charged with its governance.

• The identity and business reputation of the client's principal owners, key management, relatedparties and those charged with its governance.

• The nature of the client's operations, including its business practices.

• Information concerning the attitude of the client's principal owners, key management andthosecharged with its governance towards such matters as aggressive interpretation of accountingstandards and the internal control environment.

• All of the answers

When a company has changed auditors, according to the Professional Standards

• The predecessor must respond fully to(all) inquiries made by the successor auditor

• The predecessor may initiate the contact to successor if the former wants to informthelattermatters regarding the management s integrity

• The successor auditor has the responsibility to initiate contact with the predecessor auditortoask about the client before the engagement is accepted

• The successor may choose not to attempt any communication with the predecessor auditor

Which statement is correct relating to a potential successor auditor's responsibilityforcommunicating with the predecessor auditors in connection with a prospectivenewauditclient?

• The successor auditors may choose not to contact the predecessor auditors

• The successor auditors should obtain- permission from the prospective client tocontactthepredecessor auditors

• The predecessor auditors are not covered by confidentiality requirement under theCodeofEthics since their professional relationship with its former client has already been terminated

• The successor auditors need not contact the predecessors if the successors are awareof all available relevant facts.

A firm has obtained information that would have caused it to decline an engagement hadtheinformation been available earlier. Actions available to the auditor would include thefollowing,except

• Reporting the information and its implications to the person/s who appointed the CPA

• Withdraw from the engagement

• Withdraw from the client relationship

• Issue a disclaimer of opinion