Psa 100, 120, 200, 610, 210, 220 Questions With Complete Solutions

Prior to the acceptance of an audit engagement with a client who has terminated the services of the predecessor auditor, the CPA should a. Contact the predecessor auditor without advising the prospective client and request a complete report of the circumstance leading to the termination with the understanding that all information disclosed will be kept confidential. b. Accept the engagement without contacting the predecessor auditor since the CPA can include audit procedures to verify the reason given by the client for the termination. c. Not communicate with the predecessor auditor because this would in effect be asking the auditor to violate the confidential relationship between auditor and client. d. Advise the client of the intention to contact the predecessor auditor and request permission for the contact. correct answer: D Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's a. Opinion of any subsequent events occurring since the predecessor's audit report was issued. b. Understanding as to the reasons for the change of auditors. c. Awareness of the consistency in the application of GAAP between periods. d. Evaluation of all matters of continuing accounting significance. correct answer: B A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a. Specialized accounting principles of the client's industry. b. The competency of the client's internal audit staff. c. The uncertainty inherent in applying sampling procedures. d. Disagreements with management as to auditing procedures. correct answer: D Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement? a. Analysis of balance sheet accounts b. Analysis of income statement accounts c. All matters of continuing accounting significance d. Facts that might bear on the integrity of management correct answer: D When an independent auditor is approached to perform an audit for the first time, he or she should make inquiries of the predecessor auditor. Inquiries are necessary because the predecessor may be able to provide the successor with information that will assist the successor in determining whether a. The predecessor's work should be used. b. The company rotates auditors. c. In the predecessor's opinion, contr