Which of the Following Factors Most Likely Would Lead a CPA

question 43

Multiple Choice

Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should not be accepted?

• A) There are significant related party transactions that management claims occurred in the ordinary course of business.
• B) Internal control activities requiring the segregation of duties are subject to management override.
• C) Management continues to employ an inefficient system of information technology to record financial transactions.
• D) It is unlikely that sufficient evidence is available to support an opinion on the financial statements.

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Definitions:

Interest Rate

The cost of borrowing money, expressed as a percentage of the total amount loaned, paid by borrowers to lenders.

Present Value

The contemporary valuation of an anticipated sum of money or cash flow sequence, based on a given return rate.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.