Quick Service Center Processes the Payroll for a Variety of Clients

question 343

Multiple Choice

Quick Service Center processes the payroll for a variety of clients, including James Industries. Adams, CPA, is Quick's auditor, while Robinson, CPA, is the auditor for James Industries. Which of the following is not required of Adams?

• A) Issuing a report that describes the scope and nature of the procedures performed.
• B) Making inquiries regarding the professional reputation of Robinson, CPA.
• C) Inquiring of management regarding subsequent events that might significantly affect user organizations such as James Industries.
• D) Obtaining a letter of representation from the management of Quick Service Center.

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Definitions:

Consolidation Adjustment

Adjustments made to convert individual financial statements of parent and subsidiary companies into consolidated financial statements.

Contingent Liability

A potential financial obligation that may arise in the future, dependent on the outcome of a specific event.

Business Combination

A merger or acquisition in which separate companies come together to form a single entity, often to enjoy strategic advantages or to expand their market reach.

Group Accounts

Financial statements that combine the accounts of a parent company with those of its subsidiaries, presenting the financial position and results of operation of the group as a single economic entity.