The Predecessor Auditor, After Properly Communicating with the Successor Auditor

question 70

Multiple Choice

The predecessor auditor, after properly communicating with the successor auditor, has reissued a report because the entity desires comparative financial statements. The predecessor auditor's report should make

• A) No reference to the report or the work of the successor auditor.
• B) Reference to the work of the successor auditor in the scope paragraph.
• C) Reference to both the work and the report of the successor auditor in the opinion paragraph.
• D) Reference to the report of the successor auditor in the scope paragraph.

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Definitions:

Bounded Rationality

Refers to the concept that in decision-making, an individual's rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision.

Complete Information

A situation in which all participants have access to all relevant information needed to make informed decisions.

Course Of Action

A plan or methodology intended to achieve a specific goal or resolve a problem.

Bounded Rationality Model

A concept suggesting that individuals make decisions based on the limited information available to them and their own mental processing limitations.