The Primary Purpose of Establishing Quality Control Policies and Procedures

question 41

Multiple Choice

The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to

• A) Enable the CPA firm to attest to the reliability of the client.
• B) Satisfy the CPA firm's duty to the public concerning the acceptance of new clients.
• C) Minimize the likelihood of association with clients whose management lacks integrity.
• D) Anticipate before performing any fieldwork whether an unqualified opinion can be expressed.

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Definitions:

Denominator Level

In cost accounting, it refers to the standard quantity or activity used in calculating the predetermined overhead rate.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to products, changing with the level of production.

Efficiency Variance

A measure in cost accounting that calculates the difference between the actual quantity of input used and the standard amount expected to be used, multiplied by the standard price.

Budget Variance

The difference between budgeted or planned financial performance and the actual performance.