Which of the following best expresses the understanding of the terms of the engagement that exist between the client and the CPA firm?
A) Management asserts there are no errors, material or immaterial, in the general ledger.
B) Auditors assert that the primary audit goal is audit efficiency.
C) Auditors assert that their primary responsibility is to plan and perform the audit in order to provide reasonable assurance as to the detection of material misstatement due to error or fraud.
D) Management asserts that they will provide the auditor with a risk assessment as to material misstatements due to errors or fraud in the company's financial statements.

Question

Quizplus · Accepted Answer

The terms of engagement refer to the agreement between the client and the CPA firm regarding the scope and objectives of the audit. Choice C best expresses the understanding of the terms of engagement as it asserts the primary responsibility of auditors to provide reasonable assurance as to the detection of material misstatement due to error or fraud. Choices A, B, and D are unrelated to the terms of engagement or do not accurately reflect the responsibilities of both the client and the auditor in the audit process.

Which of the Following Best Expresses the Understanding of the Terms