Before Accepting an Engagement to Audit a New Client, an Auditor

question 17

Multiple Choice

Before accepting an engagement to audit a new client, an auditor is required to:

• A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client.
• B) obtain the prospective client's signature on the engagement letter.
• C) prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan.
• D) discuss the management representation letter with the prospective client's audit committee.

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Definitions:

Crop Insurance

A risk management tool that protects agricultural producers against loss of their crops due to natural disasters, such as flood, hail, drought, or loss in revenue due to declines in the prices of agricultural commodities.

Price Support

A government intervention mechanism to maintain the price of a commodity at a certain level by buying excess supply or offering subsidies.

Price-Support Program

Government interventions to maintain the market price of a commodity or product above its equilibrium level to support the income of producers.

Freedom to Farm Act

A U.S. law enacted in 1996 aimed at allowing farmers the flexibility to plant what they choose, sell to whom they choose, and manage their business as they see fit, significantly reducing federal government involvement in farming decisions.