AAA Quality management and acceptance

Under quality management standards, the firm's system should address:

• 1 Only the audit fee
• 2 Only the audit report
• 3 Governance and leadership, ethics, acceptance, engagement performance, resources, information and monitoring
• 4 Only independence

An engagement quality review is usually required for:

• 1 All audits
• 2 Only tax work
• 3 No audits
• 4 Audits of listed entities and other higher risk engagements

Before accepting a new audit client, the firm should consider:

• 1 Only the fee
• 2 Only the sector
• 3 Only the size
• 4 Its integrity, independence, competence and resources, and the risk

An incoming auditor, with the client's permission, should:

• 1 Communicate with the outgoing auditor about any professional reasons for the change
• 2 Accept without enquiry
• 3 Contact the press
• 4 Contact the client's competitors

A contingent fee, where the fee depends on the result of the audit, creates:

• 1 An advocacy threat only
• 2 A familiarity threat only
• 3 A self-interest threat that is usually too significant to accept
• 4 No threat

Fees from one client that are a large proportion of the firm's total income create:

• 1 No threat
• 2 An advocacy threat
• 3 A self-interest or intimidation threat
• 4 A self-review threat

Fees that have been overdue for a long time can threaten independence because they:

• 1 Remove the engagement letter
• 2 Prove integrity
• 3 May be like a loan to the client
• 4 Reduce the audit risk