In Determining the Types of Activities,engagements and Interactions an Auditor

question 20

Multiple Choice

In determining the types of activities,engagements and interactions an auditor should have with a client,the CPA and the audit firm must do which of the following?

• A)only assess the relationships of clients that pay audit fees that are material to their firm.
• B)assess all of their relationships with every client to ensure that independence is intact.
• C)focus on client satisfaction above all other considerations.
• D)realize that ethics are only guidelines and a matter of personal judgment.

---

Definitions:

Purchasing Power

The worth of a currency depicted by how much goods or services can be purchased with one unit of that currency.

Basket of Goods

A collection of products and services used as a constant sample for measuring changes in prices, often in the calculation of inflation.

CPI (Consumer Price Index)

An index that measures changes in the average price of consumer goods and services purchased by households over time.

Real Value

The value of an amount of money in terms of the goods and services it can buy, adjusted for inflation.