Which of the following factors most likely would cause a CPA to not accept a new audit engagement?
A) The prospective client has fired its prior auditor.
B) The CPA lacks a thorough understanding of the prospective client's operations and industry.
C) The CPA is unable to review the predecessor auditor's working papers due to a major fire that destroyed both hard and soft copy documentation.
D) The prospective client is unwilling to make financial records available to the CPA.

Question

Quizplus · Accepted Answer

If the prospective client is unwilling to make financial records available to the CPA, the CPA will not be able to conduct a proper audit, and it would not be ethical to accept the engagement. A lack of understanding of the client's operations and industry or the inability to review a predecessor's working papers can be addressed through additional research and communication with the client, but the lack of access to financial records is a significant barrier to fulfilling the responsibilities of an auditor. The fact that the prospective client has fired its prior auditor is not necessarily a reason to decline the engagement, although the reasons for the termination should be scrutinized. The loss of the predecessor's working papers due to a major fire is a challenge to accepting the engagement but can be addressed by requesting other documentation and working with the client to reconstruct the necessary records.

Which of the Following Factors Most Likely Would Cause a CPA