In assessing whether to accept a client for an audit engagement a CPA should

In assessing whether to accept a client for an audit

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In assessing whether to accept a client for an audit engagement, a CPA should consider A. The current financial health of the prospective client.B. The integrity of management.C. The CPA's overall engagement risk.D. All of these should be considered.
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Evaluating a prospective client requires which of the following steps?
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Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?
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Evaluating a prospective client requires which of the following steps?
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Chapter 4 – Risk Assessment (Audit Risk and Fraud Risk)
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Audit Risk Model AR = IR x CR x DR Risk of Material Misstatement (RMM) 1)When RMM goes up, DR goes down 2)When RMM goes down, DR goes upHow is detection risk related to inherent risk and control risk? Auditor’s Response
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Risk of Material Misstatement Inherent Risk (IR) The susceptibility of an assertion in an account or disclosure to a misstatement due to error or fraud that could be material, either individually or in combination with other misstatements, before consideration of any related controls. Risk of material misstatement assuming no controls or audit work (innate risk) Control Risk (CR) The risk that a misstatement that could occur in an assertion about an account or disclosure and that could be material, either individually or in combination with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity’s internal control. Risk that controls surrounding the accounting system will not catch material misstatement.
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Three Conditions for Fraud – (SAS 99, AU 316, AUC 240)
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Auditor’s Responsibilities – SAS 1 (AU 110) No distinction between responsibility for errors or fraud Error – unintentional misstatement Fraud – intentional misstatement Obtain reasonable, not absolute, assurance financial statements are free of material misstatement due to fraud or errors Key concept is materiality of the fraud or errors to the financial statements
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