Which of the following factors most likely would cause a CPA to decide not to accept a new audit engagement?
A)The CPA's lack of understanding of the prospective client's internal auditor's computer-assisted audit techniques.
B)Management's disregard of its responsibility to maintain an adequate control environment.
C)The CPA's inability to determine whether related party transactions were consummated on terms equivalent to arm's-length transactions.
D)Management's refusal to permit the CPA to perform substantive procedures before the year-end.

Question

Quizplus · Accepted Answer

A disregard for management's responsibility to maintain an adequate control environment suggests a lack of commitment to strong internal controls, which could increase the risk of material misstatements in the financial statements. This would be a red flag for the CPA and could lead to a decision not to accept the audit engagement. The other factors listed - lack of understanding of the prospective client's internal auditor's computer-assisted audit techniques, inability to determine whether related party transactions were consummated on terms equivalent to arm's-length transactions, and management's refusal to permit the CPA to perform substantive procedures before the year-end - could present challenges for the audit, but are not necessarily deal-breakers.

Which of the Following Factors Most Likely Would Cause a CPA