ACG4651 CH 8: Audit Planning and Materiality 3.1-3.3

3.1.1 An auditor is required to establish an understanding with a client regarding the services to be performed for each engagement. For an auditor of a nonissuer, this understanding generally includes

The auditor’s responsibility for ensuring that management and those charged with governance are aware of any significant deficiencies or material weaknesses in control that come to the auditor’s attention

3.1.2 An auditor’s engagement letter most likely will include

Management’s acknowledgement of its responsibility for maintaining effective internal control

3.1.3 Which of the following statements would least likely appear in an auditor’s engagement letter?

After performing our preliminary analytical procedures, we will discuss with you the other procedures we consider necessary to complete the engagement

3.1.4 The scope and nature of an auditor’s contractual obligation to a client is ordinarily set forth in the 

Engagement letter

3.1.5 Which of the following factors would most likely cause an auditor not to accept a new audit engagement?

Concluding that the entity’s management probably lacks integrity

3.1.6 In assessing whether to accept a client for an audit engagement, a CPA should consider the

Client’s Business Risk (Yes) CPA’s Business Risk (Yes)

3.1.7 Which of the following conditions most likely would pose the greatest risk in accepting a new audit engagement?

There will be a client-imposed scope limitation

3.1.8 Before accepting an engagement to audit a new client, an auditor is required to 

Make inquiries of the predecessor auditor after obtaining the consent of the prospective client

3.1.9 Ordinarily, the predecessor auditor permits the auditor to review the predecessor’s audit documentation relating to

Contingencies (Yes) Balance Sheet Accounts (Yes)

3.1.10 Which of the following circumstances would permit an independent auditor to accept an engagement after the close of the fiscal year?

Remedy of limitations resulting from accepting the engagement after the close of the end of the year, such as those relating to the existence of physical inventory

3.1.11 Upon discovering material misstatements in a client’s financial statements that the client would not revise, a predecessor auditor withdrew from the engagement. If asked by the auditor about the termination of the engagement, the predecessor auditor should

Suggest that the auditor obtain the client’s permission to discuss the reasons 

3.2.1 Which of the following is required documentation in an audit in accordance with auditing standards?

An audit plan documenting the procedures to be used to reduce audit risk

3.2.2 Early appointment of the auditor enables preliminary work to be performed by the auditor. This benefits the client because it permits the audit to be performed in

A more efficient manner