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

---

Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle.

Current Liabilities

Short-term financial obligations that are due within one year or within a normal operating cycle, including accounts payable and short-term loans.

Accounting Information

Data related to the financial transactions and status of an organization, used for analysis, reporting, and decision making.

Relevance

The importance of information in decision-making; it must be timely and have predictive and confirmatory value.