ExpertEasy1 markMultiple Choice
CPA · Question 62 · Area I: Ethics & General Principles
Which of the following is a requirement for an auditor to accept an engagement to audit a nonissuer?
Which of the following is a requirement for an auditor to accept an engagement to audit a nonissuer?
Answer options:
A.
The auditor must determine that the financial reporting framework to be applied in the preparation of the financial statements is acceptable.
B.
The auditor must confirm that the client has not changed auditors in the last 3 years.
C.
The auditor must guarantee that all fraud will be detected.
D.
The auditor must interview all predecessor auditors for the past 10 years.
How to approach this question
Engagement Acceptance: 1. Framework Acceptable? 2. Independence? 3. Competence? 4. Preconditions met?
Full Answer
A.The auditor must determine that the financial reporting framework to be applied in the preparation of the financial statements is acceptable.✓ Correct
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).
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