At a small practice where the bulk of the work is accounting,bookkeeping,and review engagements,what is an important procedure that should be followed by the PA to help ensure independence?
A)Management should be trained in accounting principles so that they can adequately assess the PAs work.
B)All transactions should be prepared and processed by client personnel.
C)Transactions and journal entries should be discussed with and approved by the client.
D)The accountant should avoid doing bookkeeping for review engagements,and restrict this to compilation engagements only.

Question

Quizplus · Accepted Answer

The PA should discuss transactions and journal entries with the client and obtain their approval to help ensure independence. By discussing and obtaining approval, the client is able to review the work performed and confirm that the information provided is accurate. This also helps to prevent any suggestions of fraud or misrepresentation. It is not necessary for management to be trained in accounting principles, for all transactions to be prepared by client personnel, or to restrict bookkeeping to compilation engagements only.

At a Small Practice Where the Bulk of the Work