Advocacy, Third-party providers, General Standards and Accounting Principles

Question 1

Members who may advocate for their clients may not do which three things?

Answer 1

1. )Stretch the bounds of performance standards
2. )Go beyond sound and reasonable professional practice
3. )Compromise credibility

Question 2

What sorts of services is it generally permissible to outsource to a third‐party service provider?

Answer 2

Administrative support

Question 3

If a client objects to outsourcing, what should a member do?

Answer 3

Either not outsource or reject the engagement altogether

Question 4

What steps should be taken when departing from generally accepted accounting principles (GAAP)?

Answer 4

1. )Disclose departure.
2. )Disclose approximate effects of departure.
3. )Explain why GAAP compliance would mislead

Question 5

What three things should a member describe when departing from generally accepted accounting principles (GAAP)?

Answer 5

1. )The departure
2. )Its approximate effects
3. )The reasons why normal compliance would mislead

Question 6

What are two circumstances that do not justify departure from generally accepted accounting principles (GAAP)?

Answer 6

1. )Unusal degree of Materiality

2. ) Conflicting Industry Practice

Question 7

When a member firm intends to outsource work to a third‐party services provider, how should it notify the client?

Answer 7

Preferably in writing

Question 8

Under what two circumstances may an auditor depart from generally accepted accounting principles (GAAP)?

Answer 8

1. )New legislation

2. )New form of business transaction

Question 9

Members doing what kind of work may not advocate for their clients?

Answer 9

Attest work