Which of the following is a core part of the due care principle for a CPA?
a Continuing professional education.
b Adequate supervision of assignments.
c Use of checklists for audit and tax engagements.
d All of the above.
Which of the following would be a violation of the due care principle on an audit assignment?
a In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to fee constraints, during the engagement the partner pulls the senior and manager and directly reviews the audit workpapers.
b In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to illness for the manager, during the engagement the partner pulls the manager and directly reviews the audit workpapers.
c In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to illness for the senior, during the engagement the manager does the senior's work and the partner directly reviews the audit workpapers.
d None of the above.
The CPA prepares a tax return for a client. The client is in a partnership that pulls a specialized TEFRA audit for this partnership. The partnership has poor records and the CPA did not prepare the partnership's tax return. The potential for restatement of income is high. What is the best course of action?
a The CPA is obligated to handle the partnership audit.
b The client should be advised engage a tax attorney to handle the partnership audit.
c The CPA cannot handle the partnership audit due to conflict of interest.
d None of the above.
Healthsouth's audit fees during the period of the spectacular financial statement frauds were $1 million a year, however, the auxiliary services of checking the cleanliness of the facilities was billed at $5 million per year. Why should the cleanliness audit services have been declined?
a Competence for an auditor is in financial statements and not cleanliness.
b The fee arrangement caused a conflict of interest for the financial statements in that the auxiliary fees were larger and the profit on these items made it look like a bribe for the audit.
c Both a and b.
d None of the above.
Which of the following is a core part of the due care principle for a CPA?
Answer: D All of the above
a Continuing professional education. b Adequate supervision of assignments. c Use of checklists for audit and tax engagements. d All of the above.
Which of the following would be a violation of the due care principle on an audit assignment?
Answer:
c In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to illness for the senior, during the engagement the manager does the senior's work and the partner directly reviews the audit workpapers.
The CPA prepares a tax return for a client. The client is in a partnership that pulls a specialized TEFRA audit for this partnership. The partnership has poor records and the CPA did not prepare the partnership's tax return. The potential for restatement of income is high. What is the best course of action?
Answer:
c The CPA cannot handle the partnership audit due to conflict of interest.
Healthsouth's audit fees during the period of the spectacular financial statement frauds were $1 million a year, however, the auxiliary services of checking the cleanliness of the facilities was billed at $5 million per year. Why should the cleanliness audit services have been declined
Answer:
b The fee arrangement caused a conflict of interest for the financial statements in that the auxiliary fees were larger and the profit on these items made it look like a bribe for the audit.
Which of the following is a core part of the due care principle for a CPA?...
3 The CPA prepares a tax return for a client. The client is in a partnership that pulls a specialized TEFRA audit for this partnership. The partnership has poor records and the CPA did not prepare the partnership's tax return. The potential for restatement of income is high. What is the best course of action? a The CPA is obligated to handle the partnership audit. b The client should be advised engage a tax attorney to handle the partnership audit....
27-Which staff level in a CPA firm manages the overall relationship with the client and manages the audit, in general? A.the audit staff assistant B.the audit manager C.the senior or in-charge auditor with 2-5 years' experience D.the audit partner
1 A CPA takes on a new individual tax client. The client drops off the information on February 10, 20xx. The CPA extends the return and notifies the client that it was extended. The client calls and emails multiple times during the year and the CPA is unresponsive or says that they are working on it. The tax return is completed on 10/15/20xx. The client owes significant taxes and penalties for non payment. a If the information for determining the...
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Which statement best describes the SEC rules relating to bookkeeping services? Bookkeeping services are permitted, as long as the individuals performing these services are not the same individuals performing the audit. Bookkeeping services are permitted if the fees from these services are insignificant relative to the audit fees. Bookkeeping services are permitted if the client agrees in writing to accept responsibility for the adequacy of these services. An accountant generally cannot provide bookkeeping services to an SEC audit client. Under...
Johnny, a CPA who is acting as the in-charge/senior on the audit engagement, works on the ABC Company audit, an existing firm client. Johnny works hard to complete this engagement along with his other engagements during the Spring busy season. The following Fall, the PCAOB notifies the firm of the inspection of the visit timing, schedule in a little over two weeks, and the selection of ABC Company’s work papers. Knowing that the PCAOB would be arriving soon to examine...
Johnny, a CPA who is acting as the in-charge/senior on the audit engagement, works on the ABC Company audit, an existing firm client. Johnny works hard to complete this engagement along with his other engagements during the Spring busy season. The following Fall, the PCAOB notifies the firm of the inspection of the visit timing, schedule in a little over two weeks, and the selection of ABC Company’s work papers. Knowing that the PCAOB would be arriving soon to examine...
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Bidding on an Audit Engagement Proposal Topic: Client/Engagement Acceptance Characters: Joyce, Manager at a new audit firm Gary, In-Charge Accountant George and Sheila, Partners Due to the economic downturn, George and Sheila were laid off by a larger audit firm. They established a new audit firm and were able to attract a few clients in the first year. They also hired Joyce and Gary, who had been laid off by the same firm. Joyce had been a manager for the...