When a potential client has announced its intention to "go public," the auditor's client acceptance decision is likely to depend upon:
A) the results of background checks performed on individuals in key financial management positions.
B) whether a formal RFP was used.
C) whether the predecessor auditor was appropriately independent.
D) characteristics of the shareholders who will purchase the public shares.

Question

Quizplus · Accepted Answer

The potential client's plan to go public indicates that they will have increased reporting and compliance requirements which make it important for the auditor to perform a thorough background check on key financial management positions to ensure that they have the expertise and integrity to handle the increased responsibilities.

Answer: C 
 The predecessor auditor's independence is important to consider as it could impact the audit opinion and create legal liability issues for the new auditor.

Therefore, the best choice is A and C.

When a Potential Client Has Announced Its Intention to "Go