During a Review Engagement,CPA Discovers That the Gross Margin Has

question 29

Multiple Choice

During a review engagement,CPA discovers that the gross margin has increased by 20% over the last few years.To avoid potential liability due to possibly misstated financial statements,what should CPA do?

• A)Correct the gross margin to be consistent with prior years.
• B)Obtain additional information to correct or substantiate the figures.
• C)No additional work is required for review engagements.
• D)Downgrade the assignment to a compilation engagement.

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Definitions:

Flavor Aversion

A learned avoidance of a particular food or flavor, usually developed after experiencing sickness or nausea following its consumption.

Conditioning

A process of behavior modification by which a subject comes to respond in a desired manner to a previously neutral stimulus that has been repeatedly presented along with an unconditioned stimulus that elicits the desired response.

Species-Specific Defense

Innate or evolved behaviors that are characteristic of a particular species and are used to defend against predators or threats.

Reactions

Responses or behavior of an organism resulting from external or internal stimuli.