A CPA Firm Billed for Audit Services Performed for a Client

question 12

Multiple Choice

A CPA firm billed for audit services performed for a client more than one year ago.The client has paid a portion of the fees outstanding,but it has not been able to pay the remaining balance due to cash flow problems.The CPA firm has verified that the cash flow problems are authentic and expects the client to be able to pay the remainder of the bill,but the CPA firm cannot reasonably estimate the timing of such payments.As a result,the CPA firm:

• A) Remains independent if the amounts that remain owing are immaterial to the CPA firm
• B) Remains independent if the client has paid over 50% of the total invoice outstanding
• C) Can preserve its independence if the client willingly signs a Note Payable for these services and the note bears a reasonable market rate of interest
• D) Lacks the independence to perform further attestation services

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Definitions:

Big Five

refers to a theory of personality that identifies five main dimensions of human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Nomothetic

An approach in psychology that seeks to study and identify general laws and principles that apply to all individuals.

Idiographic

An approach in psychological research focusing on the unique aspects of individual personalities or cases as opposed to universal laws.

Gordon Allport

A psychologist who pioneered the study of personality, emphasizing the uniqueness of the individual and the importance of the current context for understanding behavior.