Which of the following situations would lead a CPA to conclude that a potential audit engagement should not be accepted? A)There are significant related party transactions that management claims occurred in the ordinary course of business. B)Internal control activities requiring the segregation of duties are subject to management override. C)Management continues to employ an inefficient system of information technology to record financial transactions. D)It is unlikely that sufficient evidence is available to support an opinion on the financial statements.

Question

Quizplus · Accepted Answer

If it is unlikely that sufficient evidence is available to support an opinion on the financial statements, then the CPA cannot provide assurance that the financial statements are fairly stated. This would lead to a conclusion that the audit engagement should not be accepted. Choices A, B, and C represent areas of concern for auditors, but are not necessarily reasons to decline an audit engagement if they can be managed appropriately.

Which of the Following Situations Would Lead a CPA to Conclude