Which of the Following Factors Most Likely Would Cause an Auditor

question 9

Multiple Choice

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

• A) An inadequate understanding of the entity's internal control.
• B) The close proximity to the end of the entity's fiscal year.
• C) Concluding that the entity's management probably lacks integrity.
• D) An inability to perform preliminary analytical procedures before accepting the engagement.

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Definitions:

Accounting Profit

The difference between total revenue and total expenses when both are measured in accordance with generally accepted accounting principles.

Savings Account

A deposit account held at a financial institution that provides principal security and a modest interest rate.

Annual Interest

The amount of interest due over the course of a year on a loan, deposit, or investment, typically expressed as a percentage of the principal.

Economic Cost

The total cost of choosing one action over another, including both the explicit financial cost and the opportunity cost.