CPA Firm a Has Performed Most of the Audit of Consolidated

question 4

Multiple Choice

CPA Firm A has performed most of the audit of Consolidated Company's financial statements and qualifies as the group auditor.CPA Firm B did the remainder of the work.Firm A wishes to assume full responsibility for Firm B's work.Which of the following statements is correct?

• A)Such assumption of responsibility violates the profession's standards.
• B)In such circumstances,when appropriate requirements have been met,Firm A should issue a standard unmodified opinion on the financial statements.
• C)In such circumstances,when appropriate requirements have been met,Firm A should issue an unmodified opinion on the financial statements but should make appropriate reference to Firm B in the audit report.
• D)CPA firm A should normally qualify its audit report on the basis of the scope limitation involved when another CPA firm is involved.

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Definitions:

Break-Even Lease Payment

The lease payment at which the cost of leasing equals the benefits received, with no net loss or gain from entering into the lease.

Cost of Debt

The effective rate that a company pays on its total debt, representing the interest expense on all outstanding debts.

Marginal Tax Rates

The rate of additional federal income tax that applies to each additional dollar of taxable income, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Straight-Line Depreciation

A method of allocating the cost of a fixed asset evenly over its useful life.