Before Accepting an Engagement, the Auditor Should Identify Special Circumstances

question 11

Multiple Choice

Before accepting an engagement, the auditor should identify special circumstances and unusual risks.Which of these conditions is not directly part of a review of such a circumstance or risk?

• A)Reviewing industry and economic data.
• B)Identifying intended users of the audited financial statements.
• C)Assessing a prospective client's legal and financial stability.
• D)Evaluating the entity's auditability.

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Definitions:

Borrow Money

The act of obtaining funds from a lender under the agreement to pay back the principal amount along with interest or fees.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

After-Tax Lease Payment

The lease payment amount remaining after deducting any tax benefits realized by the lessee, reflecting the net cost of the lease.

Tax Rate

The proportion of income or the value of a transaction that must be paid to the government as tax.