Which of the following statements is true regarding client acceptance or continuance decisions?
A)An audit firm cannot discontinue providing audit services to a client without just cause.
B)Potential audit fees are not a valid consideration in the acceptance or continuance decision.
C)The client acceptance/continuance decision is one of the most important factors in audit quality.
D)Audit firms are not permitted to conduct background checks on the management of a potential client.

Question

Quizplus · Accepted Answer

The client acceptance/continuance decision is crucial in ensuring audit quality as it helps the audit firm evaluate the risks associated with accepting or continuing a client relationship.

Note: A is incorrect because an audit firm can discontinue providing audit services if there are valid reasons, such as a breach of contract or the client's unwillingness to address significant accounting or auditing issues. B is incorrect because potential audit fees are a consideration in the acceptance or continuance decision. D is incorrect as audit firms may conduct background checks, within ethical and legal boundaries, to assess the integrity of the management of a potential client.

Which of the Following Statements Is True Regarding Client Acceptance