When Should a PA Assess the Five Threats to Independence

question 14

Multiple Choice

When should a PA assess the five threats to independence with respect to an audit engagement?

• A)when deciding to accept a client or whether to continue an existing engagement
• B)after signing the engagement letter and before commencing field work
• C)after the completion of this year's audit,before starting the next engagement
• D)after a discussion with the Board of Directors

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Definitions:

Liquidating Dividend

A type of dividend paid by a company to its shareholders from its capital rather than its earnings, typically during the partial or full liquidation of the company.

Dividend

A portion of a company's earnings that is paid to shareholders, typically on a quarterly basis.

NPV Projects

Projects evaluated based on Net Present Value, a method to assess the profitability of investments by discounting future cash flows.