A CPA Firm Should Decline an Offer to Perform Consulting

question 110

Multiple Choice

A CPA firm should decline an offer to perform consulting services engagement if

• A) the proposed engagement is not accounting related.
• B) recommendations made by the CPA firm are to be subject to review by the client.
• C) acceptance would require the CPA firm to make management decisions for an audit client.
• D) any of the above is true.

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Definitions:

Lend Money

The action of giving money to someone with the expectation that it will be paid back in the future, possibly with interest.

Note

A written promise or obligation to pay a specified sum of money to a specified person at a specified time.

Secondary Liability

Secondary liability refers to a legal obligation that arises not from direct involvement in a wrongful act, but from a failure to properly oversee or control the primary party responsible, or from benefiting from the act.

Negotiable Instrument

An official paper that assures the delivery of a particular monetary amount, which can be demanded at any moment or at an agreed-upon time, identifying the person who will make the payment.