When a Company Has Changed Auditors,according to the Professional Standards

question 37

Multiple Choice

When a company has changed auditors,according to the Professional Standards:

• A)The successor auditor has the responsibility to initiate contact with the predecessor auditor to ask about the client before the engagement is accepted;the predecessor has no responsibility to initiate this contact,even when aware of matters bearing on the integrity of management.
• B)The predecessor must always respond fully to all inquiries made by the successor auditor.
• C)The successor must discuss with the predecessor matters bearing on the engagement prior to accepting the engagement.
• D)The successor may choose not to attempt any communication with the predecessor auditor.

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Definitions:

CVP Analysis

Cost-Volume-Profit Analysis, a method used in managerial accounting to understand the impact of varying levels of costs and volume on operating profit.

Variable Cost

Expenses that vary directly with the amount of products or services a company generates.

Fixed Costs

Costs that remain constant regardless of a company's level of activity, including expenses like rent, salaries, and insurance.

Profit

The financial gain made in a transaction or operation, calculated as the difference between revenue and expenses.