Area I: Ethics & General Principles — CPA Practice Question 62

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Engagement Acceptance: 1. Framework Acceptable? 2. Independence? 3. Competence? 4. Preconditions met?

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A.The auditor must determine that the financial reporting framework to be applied in the preparation of the financial statements is acceptable.✓ Correct

The auditor must determine that the financial reporting framework to be applied in the preparation of the financial statements is acceptable.

Before accepting an engagement, the auditor must determine whether the financial reporting framework (e.g., US GAAP, IFRS, Tax Basis) to be applied in the preparation of the financial statements is acceptable.

Common mistakes

Thinking the auditor chooses the framework (Management does; Auditor accepts it).

Which of the following is a requirement for an auditor to accept an engagement to audit a nonissuer?

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Practice the full CPA AUD Practice Exam 3

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