The best description of whether a CPA has met the required standard of care in conducting an audit of a client?
Friday, April 30th, 2010 at
1:20 am
The best description of whether a CPA has met the required standard of care in conducting an audit of a client’s financial statements is
a.The client’s expectations with regard to the accuracy of audited financial statements.
b.The accuracy of the financial statements and whether the statements conform to generally accepted accounting principles.
c.Whether the CPA conducted the audit with the same skill and care expected of an ordinarily prudent CPA under the circumstances.
d.Whether the audit was conducted to investigate and discover all acts of fraud.
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The correct answer is "b"
"a" is not correct because a CPA’s primary obligation is not to meet the expectations of the client, but rather the expectations of the end-users (shareholders, creditors, regulatory agencies)
"c" is not correct because there is no such thing as an "ordinary prudent CPA" standard
"d" is not correct because an auditor is not responsible for discovering all acts of fraud.