11) An auditor's engagement leter most likaly will include A Aroquest for pemission to contact the client's lawyer for assistance in identitying itigation, claims, and assesaments. B. A reminder that management is responrsible for ilegal acts commited by employees. C. The auditor's preliminary assessment of the risk factors relating to misstatements arising trom taudlent firancial reporting D. Management's acknowledgment of its responsibity for such intermal control as it determines is necessary to enable the preparation of financial statements that are troe trom material misstatoment. 12 Early appointment of the independent auditor will enable A Amore thorough eamination to be performed. B. A proper study and ealation of intemal control to be performed. C. Sufcient competent evidential maner to be obtained. D. Amore efficient eamination to be planned. 13 An audtor who accepts an audt engagement and does not possess the industry epertise of the business entty. should A Engage financial epets familar with the nature of the business entty. B. Obtain knowledge of matters that relate to the nature of the entty's business C. Refer a substantal portion of the audit to another CPA who wil act as the principal auditor. D. Frst inform management that an ungualfed opinion cannot be issued. 14 Engagement letters are widely used in practice for professional engagement of all types. The primary purpose of the engagement letter is to A Remind management that the primary responsibility for the financial statements rests with management. B. Satisty the requrements of the CPA's lablity insurance policy. C. Provide a starting poirt for the auditor's preparation of the prelminary audt program. 15 Before accepting an audit engagement, a successor auditor should make specific inquries of the predecessor auditor regarding A Dsagroements of the predecessor had witm the client conceming audting procedures and accounting principles. B. The predecessor's evaluation of matters of continuing accourting significance. C. The degree of cooperation the predecessor received conceming the inguiry of the clent's lawyer. D. The predecessor's assessments of inherent risk and judgments about materiality. 16 Which of the following factors would most kaly cause a CPA to decide not to accept a newaudit engagemert? A The CPA's lack of understanding of the prospective cient's irtemal auditor's computer-assisted audt techniques. B. Management's disregard of its responsibility to maintain an adequate intemal control environment. C. The CPA's inabilty to determine whether related-party transactions were consummated on terms equhalent to am's length transaction D. Maragement's retusal to permit the CPA to perform substartive tests betore the year-end. 17) Which of the following is not nomaly performed in the preplanningor pre-engagement phase? A Deciding whether to accept or reject an audit engagement B. nguring from predecessor auditor C. Preparing an engagement letter D. Making a preliminary estimate of materiality 18 The following are considered by a CPA firm in deciding whether to accept a new client, except A The cient's probability of achieving an unmodified opinion B. The dient's financial ablity C. The cient's relations with its previous CPA fim D. The cient's standing in the business community 19) fa change in the type of engagement trom higher to lower level of assurance is reasonably justfied, the report based on the revised engagement A Omits reference to the original engagement B. Should always refer to any procedures that may have been performed in the original engagement. C. Should refer to the original engagement in a separate paragragh preceding the opinion paragraph. D. Should quality the opinion due to a scope limitation. 20 One of the frst things that the auditor will do ater accepting a new client is A Tour the cient's tacilties