ExpertMedium1 markMultiple Choice
CPA · Question 46 · Area 4: Reporting
Which of the following is a requirement for an auditor to accept an engagement to audit a client's compliance with specific requirements (Compliance Audit)?
Which of the following is a requirement for an auditor to accept an engagement to audit a client's compliance with specific requirements (Compliance Audit)?
Answer options:
A.
The auditor must provide a legal opinion on compliance.
B.
Management accepts responsibility for the entity's compliance with specified requirements.
C.
The auditor must perform a 100% test of all compliance transactions.
D.
The auditor must be a government employee.
How to approach this question
Preconditions for any audit: Management must own the responsibility.
Full Answer
B.Management accepts responsibility for the entity's compliance with specified requirements.✓ Correct
Management accepts responsibility for the entity's compliance with specified requirements.
A precondition for a compliance audit is that management acknowledges and accepts its responsibility for the entity's compliance with specified requirements and for the internal control over compliance.
Common mistakes
Thinking auditors give legal opinions.
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