In Determining the Scope and Nature of Services to Be

question 61

Multiple Choice

In determining the scope and nature of services to be performed in public practice,a CPA firm should:

• A)Require independence for all services performed.
• B)Determine that the performance of all services is consistent with the firm's members' role as professionals.
• C)Have in place internal control procedures.
• D)Only perform accounting related services.

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Definitions:

Faulty Hindsight

The misjudgment of the reasons behind past decisions based on the outcome rather than on the information available at the time.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business or personal decisions.

Escalated Commitment

A pattern of behavior in which an individual or group continues to rationalize their decisions, invest additional resources, and follow a failing course of action.

Risky Shift

The tendency for groups to make riskier decisions than the average risk initially advocated by their individual members.