CPA · Question 05 · Area I: Ethics & General Principles
An auditor is accepting an engagement to audit the financial statements of a new nonissuer client. The predecessor auditor's response to inquiries indicates that there were significant disagreements with management regarding accounting principles and audit procedures. Which of the following is the auditor's MOST appropriate initial course of action upon receiving this information?
Answer options:
Decline the engagement immediately to avoid potential litigation.
Accept the engagement but issue a qualified opinion due to the predecessor's concerns.
Evaluate the implications of the disagreements on the integrity of management and the potential risk of material misstatement before deciding to accept the engagement.
Request the predecessor auditor to provide their working papers to resolve the disagreements.
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