Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements?
A) The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
B) The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are those who rely on the financial statements.
C) Should a situation arise where there is no convincing authoritative standard available, and there is a choice of actions which could impact a client's financial statements, the CPA is free to endorse the choice which is in the investors' interests.
D) The CPA firm has primary responsibility to the FASB.

Question

Quizplus · Accepted Answer

When a CPA is engaged to perform an audit of financial statements, the primary beneficiaries of the audit are those who rely on the financial statements. Although the CPA firm is engaged and paid by the client, their responsibilities do not include acting as an advocate for the client. Instead, the CPA must conduct the audit in accordance with the generally accepted auditing standards (GAAS) and provide an independent opinion on the fairness of the financial statements. In situations where there is no compelling standard, the CPA must exercise professional judgment to ensure that the financial statements are fairly presented, but their primary responsibility is to the users of the financial statements, not to the client or the FASB.

Which of the Following Statements Is True When the CPA