ExpertMedium1 markMultiple Choice
CPA · Question 03 · Area 1: Ethics
A CPA firm is designing its system of quality control. Which of the following policies would most likely satisfy the element of 'Engagement Performance' regarding consultation?
A CPA firm is designing its system of quality control. Which of the following policies would most likely satisfy the element of 'Engagement Performance' regarding consultation?
Answer options:
A.
The firm requires all personnel to attend 40 hours of continuing professional education annually.
B.
The firm designates a senior partner as a specialist in SEC reporting to provide advice on complex regulatory matters.
C.
The firm establishes criteria for deciding whether to retain a client based on management integrity.
D.
The firm implements a peer review program to inspect a sample of completed engagements.
How to approach this question
Map the specific policy to the six elements of Quality Control (QC 10). Consultation falls under Engagement Performance.
Full Answer
B.The firm designates a senior partner as a specialist in SEC reporting to provide advice on complex regulatory matters.✓ Correct
The firm designates a senior partner as a specialist in SEC reporting to provide advice on complex regulatory matters.
The element of Engagement Performance includes policies and procedures to ensure that consultation takes place on difficult or contentious matters, that sufficient resources are available, and that the nature and scope of such consultations are documented. Designating a specialist for consultation directly addresses this.
Common mistakes
Confusing Human Resources (training) or Monitoring (peer review) with Engagement Performance.
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