When Performing an Audit, a CPA

question 50

Multiple Choice

When performing an audit, a CPA

• A) Must exercise the level of care, skill, and judgment expected of a reasonably prudent CPA under the circumstances.
• B) Must strictly adhere to generally accepted accounting principles.
• C) Is strictly liable for failing to discover client fraud.
• D) Is not liable under any legal standard unless the CPA commits gross negligence or intentionally disregards generally accepted auditing standards.

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Definitions:

Extraversion

A quality in someone's character that involves being sociable, loquacious, forthright, and having a notable capacity for showing emotions vividly.

Agreeableness

A personality trait characterized by qualities such as kindness, cooperation, warmth, and consideration of others.

Empirically Derived Tests

Psychological tests developed by creating a large pool of items, then selecting those that discriminate between different groups of people based on empirical data.

Factor Analysis

A statistical method used to identify clusters of related variables and simplify data by reducing it to underlying factors.