An Audit Firm's Quality Control Procedures Pertaining to the Acceptance

question 24

Multiple Choice

An audit firm's quality control procedures pertaining to the acceptance of a prospective audit client would most likely include:

• A) inquiry of management as to whether disagreements between the previous auditor and the prospective client were resolved satisfactorily.
• B) consideration of whether sufficient appropriate audit evidence may be obtained to afford a reasonable basis for an opinion.
• C) inquiry of third parties, such as the prospective client's bankers and solicitors, about information regarding the prospective client and its management.
• D) consideration of whether the internal control is sufficiently effective to permit a reduction in the extent of required substantive tests.

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Definitions:

Sector Fund

A mutual fund that invests exclusively in a particular sector of the economy, such as technology, health care, or finance.

Money Market Funds

Mutual funds that invest in short-term debt securities such as government bonds, treasury bills, and commercial paper, offering investors liquidity and safety.

NAV

NAV, or Net Asset Value, represents the per-share market value of a fund's assets minus its liabilities, crucial for evaluating investment funds.

Money Market Funds

Investment funds that pool money from investors to purchase short-term, high-quality debt securities and aim to provide returns with lower risk.