At step 5 when a CPA confronts threats to ethical decision-making and the safeguards applied to reduce the threat, what is the suggested best practice?

Contact the FBI, tape all conversations with the client, then offer the engagement to a competitor.

Increase the fee charged to absorb any risk, immediately conclude that the threats are at an acceptable level and proceed with an internal control audit.

Immediately decline the engagement, terminate the contract, and contact the AICPA.

Document the identified threats, document the safeguards applied, and document the CPAs evaluation of the effectiveness of the safeguards.

The audit expectation gap is narrowed by realistic user expectations such as that the auditor ________.

tests a sample of transactions

is guaranteeing the future viability of the entity

is providing complete assurance

will definitely find any and all fraud

3.Education of financial statement users as to the responsibilities of preparers and auditors of financial statements will _________.

reduce the audit expectation gap

increase audit firm reputation and independence

ensure the auditor will find all material fraud

guarantee the future viability of the entity