A CPA Firm Establishes Quality Control Policies and Procedures for Deciding

question 22

Multiple Choice

A CPA firm establishes quality control policies and procedures for deciding whether to accept a new client or continue to perform services for a current client.The primary purpose for establishing such policies and procedures is:

• A)To enable the auditor to attest to the integrity or reliability of a client.
• B)To comply with the quality control standards established by regulatory bodies.
• C)To minimize the likelihood of association with clients whose managements lack integrity.
• D)To lessen the exposure to litigation resulting from failure to detect fraud in client financial statements.

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Definitions:

Sued for Malpractice

The legal action taken against professionals (e.g., doctors, lawyers) when they are accused of failing to provide the standard level of care, leading to harm or loss.

Accountant-Client Privilege

A legal principle that maintains the confidentiality of communications between an accountant and their client.

Federal Law

Federal Law consists of the body of law created by the federal government of a country, governing relationships, powers, and structure of its entities and individuals.

Restatement Test

A legal principle used to clarify the law by restating existing statutes or case law in a simplified manner.