1.Which of the following communications between the auditor with final responsibility for an engagement (such as the engagement partner) and the audit engagement team regarding the susceptibility of a clients financial statements to material fraud is required by AICPA Professional Standards? a. Discussing the firms policy for allocating budgeted audit hours to detect fraud. b. Explaining all procedures to be performed on the engagement to detect significant errors or fraudulent activity. c. Explaining the firms strategy for managing and controlling legal liability due to fraud. d. Discussing the need to maintain a questioning mind and to exercise professional skepticism throughout the audit. e. Obtaining a written engagement letter to document the terms of the engagement.

2. Which of the following nonaudit services is permitted by the SEC without being seen as impairing a CPA firms independence when also serving as the auditor of a public company? a. Some specific tax services. b. Information system design and implementation services. c. Human resource services (such as executive search). d. Internal audit services. e. Bookkeeping and general ledger maintenance.