Which of the following factors pertaining to a client's accounting function is most significant in the client acceptance or continuance decision?
A) Effectiveness of internal controls.
B) Use of a commercial accounting software program.
C) Frequency of performance evaluations for accounting personnel.
D) Frequency of updating the general ledger.

Question

Quizplus · Accepted Answer

The effectiveness of internal controls is the most significant factor in the client acceptance or continuance decision as it directly impacts the quality and reliability of the financial statements. A weak control environment increases the risk of material misstatements, which can result in audit failure or reputational damage. The use of a commercial accounting software program, frequency of performance evaluations for accounting personnel, and frequency of updating the general ledger can also be important factors, but they are secondary to the effectiveness of internal controls.

Which of the Following Factors Pertaining to a Client's Accounting