The billing arrangement based on actual time spent by audit engagement team is a. Flat sum basis b. Per diem basis c. Maximum fee basis d. Retainer basis

Question

The billing arrangement based on actual time spent by audit engagement team is a. Flat sum basis b. Per diem basis c. Maximum fee basis d. Retainer basis

The billing arrangement based on actual
time spent by audit engagement team is
a. Flat sum basis
b. Per diem basis
c. Maximum fee basis
d. Retainer basis

asked Nov 3, 2021 by shubhhw

1 Answer

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Under this method of billing a client, the external auditors charges on the basis of time spent by principals/partners, supervisors, seniors and juniors at predetermined rates agreed upon with the client a. Maximum fee basis b. Flat sum basis c. Retainer basis d. Per diem basis

Description : Under this method of billing a client, the external auditors charges on the basis of time spent by principals/partners, supervisors, seniors and juniors at predetermined rates agreed upon with the client a. Maximum fee basis b. Flat sum basis c. Retainer basis d. Per diem basis

Last Answer : Per diem basis

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Description : The CPA should not undertake an engagement if his fee is to be based upon a. A percentage of audited net income. b. Per diem rates plus expenses. c. The findings of a tax authority. d. The complexity of the service rendered

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Which of the following statements would least likely appear in an auditor's engagement letter? a. Our engagement is subject to the risk that material errors, fraud, and defalcations, if they exist, will not be detected. b. During the course of our audit we may observe opportunities for economy in, or improved controls over, your operations. c. After performing our preliminary analytical procedures we will discuss with you the other procedures we consider necessary to complete the engagement. d. Fees for our services are based on our regular per diem rates, plus travel and other out-of-pocket expenses

Description : Which of the following statements would least likely appear in an auditor's engagement letter? a. Our engagement is subject to the risk that material errors, fraud, and defalcations, if they exist, ... services are based on our regular per diem rates, plus travel and other out-of-pocket expenses

Last Answer : After performing our preliminary analytical procedures we will discuss with you the other procedures we consider necessary to complete the engagement.

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Description : .Which of the following fee arrangements is in violation of the Code of Professional Conduct? a. A fee based on whether the CPA's report on the client's financial statements results in the approval of a ... actual time spent on the engagement. d. A fee based on the fee charged by the prior auditor.

Last Answer : A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan

An engagement letter should be written before the start of an audit because a. It specifies the client's responsibility for preparing schedules and making the records available to the auditor. b. It may limit the auditor's legal liability by specifying the auditor's responsibilities. c. It specifies the basis for billing the audit for the upcoming year. d. All of the above

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Last Answer : All of the above

After an auditor had been engaged to perform the first audit for a nonpublic entity, the client requested to change the engagement to a review. In which of the following situations would there be a reasonable basis to comply with the client's request? a. Management refused to sign the client representation letter. b. The client's bank required an audit before committing to a loan, but the client subsequently acquired alternative financing. c. The auditor was prohibited by the client from corresponding with the client's legal counsel. d. The auditing procedures were substantially complete and the auditor determined that an unqualified opinion was warranted, but there was a disagreement concerning the audit fee.

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Last Answer : The client's bank required an audit before committing to a loan, but the client subsequently acquired alternative financing.

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Last Answer : The engagement proposal should be accepted

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Last Answer : Determine whether changes have occurred that may affect the relevance of such information in the current audit.

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Last Answer : Jackson may request compensation from the other firm for any professional services rendered to it in connection with the engagement.

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Last Answer : After the auditor has completed an evaluation of the existing internal accounting contro

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Last Answer : The availability of client personnel and data

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Last Answer : They include representations of financial statements in accordance with the applicable reporting criteria

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Last Answer : They include representations of financial statements in accordance with the applicable reporting criteria

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Last Answer : Engagement team

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Description : Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more upon ... engagement. d. Place increased emphasis on the audit of objective transactions rather than subjective transactions.

Last Answer : Use less predictable audit procedures.

Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more uponjudgment.b. Use less predictable auditprocedures.c. Use only certified public accountants onthe engagement.d. Place increased emphasis on the audit ofobjective transactions rather thansubjective transactions

Description : Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more upon ... the engagement. d. Place increased emphasis on the audit of objective transactions rather than subjective transactions

Last Answer : Use less predictable audit procedures.

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Last Answer : Engagement team

Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more upon judgment. b. Only use certified public accountants on the engagement. c. Place increased emphasis on the audit of objective transactions rather than subjective transactions. d. Use less predictable audit procedures.

Description : Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more upon ... the audit of objective transactions rather than subjective transactions. d. Use less predictable audit procedures.

Last Answer : Use less predictable audit procedures.

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Last Answer : Provide the CPA with evidence and documentation which may be helpful in the event of a lawsuit.

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Last Answer : Requiring timely identification of the staffing requirements of specific engagements so that enough qualified personnel can be made available

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Description : The working papers prepared by a CPA in connection with an audit engagement are owned by the CPA, subject to certain limitations. The rationale for this rule is to a. Protect the ... d. Establish a continuity of relationship with the client whereby indiscriminate replacement of CPAs is discouraged

Last Answer : Provide the CPA with evidence and documentation which may be helpful in the event of a lawsuit

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Last Answer : The expected outcome of the engagement

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Description : The practice of accountancy includes the following except: a. Serving as audit examiner for the Commission on Audit. b. Working as a Dean of a College that grants a degree of BS Accountancy. c. ... business enterprise. d. Provision of assurance services to more than one client and on a fee basis.

Last Answer : Being appointed as the marketing manager of a business enterprise.

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Last Answer : Minimum standards of performance which must be achieved on each audit engagement.

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Description : If a professional accountant is billing an audit client a number of hours greater than those actually worked, which of the following fundamental principles is likely violated? a. Objectivity b. Integrity c. Professional due care d. Confidentiality

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Last Answer : Internal control over shipping, billing, and recording of sales revenue is weak.

Engagement risk is influenced by the risks associated with the following except a. Nature and form of the subject matterb. Nature and form of the criteria applied tothe subject matter.c. Unreasonably low professional fee.d. Nature and extent of the process used tocollect and evaluate evidence.

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Last Answer : Unreasonably low professional fee

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Description : The IFAC Code of Professional Conduct will ordinarily be considered to have been violated when the member represents that specific consulting services will be performed for a stated fee and it is apparent ... for comparable services. c. Fee was a competitive bid. d. Member would not be independent

Last Answer : Actual fee would be substantially higher

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Description : Which of the following statements are factors to consider whether the firm has the capabilities, competence, time and resources to undertake a new audit engagement from a prospective client: I. Firm personnel have knowledge of relevant ... II and IV only. c. II, III and IV only d. I, II, III and IV

Last Answer : I, II, III and IV

When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining a. Whether, in the predecessor's opinion, internal control of the company has been satisfactory. b. Whether the engagement should be accepted. c. Whether the predecessor's work should be utilized. d. Whether the company follows the policy of rotating its auditors.

Description : When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide ... 's work should be utilized. d. Whether the company follows the policy of rotating its auditors.

Last Answer : Whether the engagement should be accepted.

A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting firm made up of three non-CPA practitioners. c. Issued an unqualified opinion on the 2006 financial statements when fees for the 2005 audit were unpaid. d. Purchased a bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period

Description : A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an ... bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period

Last Answer : Issued an unqualified opinion on the 2006 financial statements when fees for the 2005 audit were unpaid

A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting firm made up of three non-CPA practitioners. c. Issued an unqualified opinion on the 2010 financial statements when fees for the 2009 audit were unpaid. d. Purchased a bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period.

Description : A violation of the ethical standards would most likely have occurred when a CPA a. Made arrangement with a bank to collect notes issued by a client in payment of fees due. b. Joined an accounting ... firm's practice of monthly write-ups for a percentage of fees received over a three-year period.

Last Answer : Issued an unqualified opinion on the 2010 financial statements when fees for the 2009 audit were unpaid

Which of the following is an element of "directing an audit assistant" objective? a. Identifying in advance the staffing requirements of a particular audit engagement. b. Resolving any differences in professional judgment between audit personnel. c. Resolution of differences in audit findings. d. Informing assistants of their responsibilities and the objectives of the procedures they are to perform

Description : Which of the following is an element of "directing an audit assistant" objective? a. Identifying in advance the staffing requirements of a particular audit engagement. b. Resolving any ... . Informing assistants of their responsibilities and the objectives of the procedures they are to perform

Last Answer : Informing assistants of their responsibilities and the objectives of the procedures they are to perform

Which of the following best describes the purpose of the engagement letter? a. The engagement letter conveys to management the detailed steps to be applied in the audit process. b. The engagement letter relieves the auditor of some responsibility for the exercise of due care. c. By clearly defining the nature of the engagement, the engagement letter helps avoid and resolve misunderstandings between CPA andclient regarding the precise nature of the work to be performed and the type of report to be issued. d. The engagement letter should be signed by both the client and the CPA and should be used only for independent audits

Description : Which of the following best describes the purpose of the engagement letter? a. The engagement letter conveys to management the detailed steps to be applied in the audit process. b. The engagement letter ... be signed by both the client and the CPA and should be used only for independent audits

Last Answer : By clearly defining the nature of the engagement, the engagement letter helps avoid and resolve misunderstandings between CPA and client regarding the precise nature of the work to be performed and the type of report to be issued

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

A review engagement differs in scope as compared to an audit due to a. The subject matter of the audit. b. The quantity and type of evidence obtained. c. Ethical requirements with respect to independence. d. The users of the financial statements

Description : A review engagement differs in scope as compared to an audit due to a. The subject matter of the audit. b. The quantity and type of evidence obtained. c. Ethical requirements with respect to independence. d. The users of the financial statements

Last Answer : The quantity and type of evidence obtained

The auditor's evaluation of the likelihood of material employee fraud is normally done initially as a part of a. The assessment of whether to accept the audit engagement. b. Understanding the entity's internal control structure. c. The Tests of Controls. d. The Tests of Transactions

Description : The auditor's evaluation of the likelihood of material employee fraud is normally done initially as a part of a. The assessment of whether to accept the audit engagement. b. Understanding the entity's internal control structure. c. The Tests of Controls. d. The Tests of Transactions

Last Answer : Understanding the entity's internal control structure.

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

At the beginning of the current audit engagement, the auditor should perform key preplanning activities which include all of the following except: a. Performing procedures regarding client acceptance or continuance. b. Evaluating compliance with ethical requirements. c. Establishing an understanding of the terms of the engagement. d. Considering internal contro

Description : At the beginning of the current audit engagement, the auditor should perform key preplanning activities which include all of the following except: a. Performing procedures regarding client acceptance ... c. Establishing an understanding of the terms of the engagement. d. Considering internal contro

Last Answer : Considering internal contro

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

.Prior to beginning the field work on a new audit engagement in which a CPA does not possess expertise in the industry in which the client operates, the CPA should a. Reduce audit risk by lowering the preliminary levels of materiality. b. Design special substantive tests to compensate for the lack of industry expertise. c. Engage financial experts familiar with the nature of the industry. d. Obtain a knowledge of matters that relates to the nature of the entity's business

Description : .Prior to beginning the field work on a new audit engagement in which a CPA does not possess expertise in the industry in which the client operates, the CPA should a. Reduce audit risk by lowering ... the industry. d. Obtain a knowledge of matters that relates to the nature of the entity's business

Last Answer : Obtain a knowledge of matters that relates to the nature of the entity's business

.A review engagement differs in scope as compared to an audit due to a. The subject matter of the audit. b. The quantity and type of evidence obtained. c. Ethical requirements with respect to independence. d. The users of the financial statements.

Description : .A review engagement differs in scope as compared to an audit due to a. The subject matter of the audit. b. The quantity and type of evidence obtained. c. Ethical requirements with respect to independence. d. The users of the financial statements.

Last Answer : The quantity and type of evidence obtained.

The auditor's evaluation of the likelihood of material employee fraud is normally done initially as a part of a. The assessment of whether to accept the audit engagement. b. Understanding the entity's internal control structure. c. The Tests of Controls. d. The Tests of Transactions

Description : The auditor's evaluation of the likelihood of material employee fraud is normally done initially as a part of a. The assessment of whether to accept the audit engagement. b. Understanding the entity's internal control structure. c. The Tests of Controls. d. The Tests of Transactions

Last Answer : Understanding the entity's internal control structure

Should the auditor uncover circumstances during the audit that may cause suspicions of management fraud, the auditor must a. Withdraw from engagement. b. Issue an adverse opinion. c. Issue a disclaimer. d. Evaluate their implications and consider the need to modify audit evidence

Description : Should the auditor uncover circumstances during the audit that may cause suspicions of management fraud, the auditor must a. Withdraw from engagement. b. Issue an adverse opinion. c. Issue a disclaimer. d. Evaluate their implications and consider the need to modify audit evidence

Last Answer : Evaluate their implications and consider the need to modify audit evidence

What will an auditor who has been proposed for an audit engagement usually do prior to accepting a new client? a. Draft the financial statements of the client as a measure of goodwilb. With the permission from the prospective client, contact the predecessor auditor to determine if there are any disagreements between the client and the audit firms. c. Obtain the potential client's permission to talk to the former auditor and review work papers. d. Perform a peer review on the potential client in accordance with professional standardsl

Description : What will an auditor who has been proposed for an audit engagement usually do prior to accepting a new client? a. Draft the financial statements of the client as a measure of goodwill b ... review work papers. d. Perform a peer review on the potential client in accordance with professional standards

Last Answer : With the permission from the prospective client, contact the predecessor auditor to determine if there are any disagreements between the client and the audit firms

Which of the following is not included in an audit engagement letter? a. Objectives of the engagement b. Representations that the financial statements were prepared in accordance with PFRS c. Management's responsibilities d. A clear explanation of the services to be performed on the engagement

Description : Which of the following is not included in an audit engagement letter? a. Objectives of the engagement b. Representations that the financial statements were prepared in accordance with PFRS c. Management's responsibilities d. A clear explanation of the services to be performed on the engagement

Last Answer : Representations that the financial statements were prepared in accordance with PFRS

Which of the following statements is true when the CPA has been engaged to do an attestation engagement? a. The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client. b. The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are the statement users. c. Should a situation arise where there is no convincing authoritative standard available, and there is a choice of actions which could impact client's financial statements either positively or negatively, the CPA is free to endorse the choice which is best in the client's interest. d. As long as CPA firms are competent, it is not required that they remain unbiased.

Description : Which of the following statements is true when the CPA has been engaged to do an attestation engagement? a. The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility ... . d. As long as CPA firms are competent, it is not required that they remain unbiased.

Last Answer : The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are the statement users

When management refuses to disclose in the financial statements noncompliance to laws and regulations which are identified by the independent auditor, the CPA may be charged with unethical conduct for a. Withdrawing from the engagement. b. Issuing a disclaimer of opinionc. Failure to uncover the noncompliance to laws and regulations during the prior audits. d. Reporting these activities to the audit committee..

Description : When management refuses to disclose in the financial statements noncompliance to laws and regulations which are identified by the independent auditor, the CPA may be charged with unethical conduct for ... and regulations during the prior audits. d. Reporting these activities to the audit committee.

Last Answer : Issuing a disclaimer of opinion

Every independent audit engagement involves both auditing standards and auditing procedures. The relationship between the two may be illustrated by how they apply from engagement to engagement. The best representation of this application is that, from one audit engagement to the next, a. Auditing standards are applied uniformly but auditing procedures may vary. b. Auditing standards may vary but auditing procedures are applied uniformly. c. Auditing standards are applied uniformly but auditing procedures are optional. d. Both auditing standards and auditing procedures are applied uniformly

Description : Every independent audit engagement involves both auditing standards and auditing procedures. The relationship between the two may be illustrated by how they apply from engagement to engagement. The ... procedures are optional. d. Both auditing standards and auditing procedures are applied uniformly

Last Answer : Auditing standards are applied uniformly but auditing procedures may vary

An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity, should a. Engage financial experts familiar with the nature of the business entity. b. Obtain a knowledge of matters that relates to the nature of the entity's business. c. Refer a substantial portion of the audit to another CPA who will act as the principal auditor. d. First inform management that an unqualified opinion cannot be issued

Description : An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity, should a. Engage financial experts familiar with the nature of the business entity. ... as the principal auditor. d. First inform management that an unqualified opinion cannot be issued

Last Answer : Obtain a knowledge of matters that relates to the nature of the entity's business.

shubhhw · Answer 1 · 2021-11-03T16:32:41+0000

Answer :

Per diem basis

answered Nov 3, 2021 by shubhhw

The billing arrangement based on actual time spent by audit engagement team is a. Flat sum basis b. Per diem basis c. Maximum fee basis d. Retainer basis

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