Which of the following is a core part of the due care principle for a CPA?

a Continuing professional education.

b Adequate supervision of assignments.

c Use of checklists for audit and tax engagements.

d All of the above.

Which of the following would be a violation of the due care principle on an audit assignment?

a In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to fee constraints, during the engagement the partner pulls the senior and manager and directly reviews the audit workpapers.

b In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to illness for the manager, during the engagement the partner pulls the manager and directly reviews the audit workpapers.

c In auditing a small bank, the partner on the engagement plans for 3 staff, 1 senior, 1 manager and 1 partner. Due to illness for the senior, during the engagement the manager does the senior's work and the partner directly reviews the audit workpapers.

d None of the above.

The CPA prepares a tax return for a client. The client is in a partnership that pulls a specialized TEFRA audit for this partnership. The partnership has poor records and the CPA did not prepare the partnership's tax return. The potential for restatement of income is high. What is the best course of action?

a The CPA is obligated to handle the partnership audit.

b The client should be advised engage a tax attorney to handle the partnership audit.

c The CPA cannot handle the partnership audit due to conflict of interest.

d None of the above.

Healthsouth's audit fees during the period of the spectacular financial statement frauds were $1 million a year, however, the auxiliary services of checking the cleanliness of the facilities was billed at $5 million per year. Why should the cleanliness audit services have been declined?

a Competence for an auditor is in financial statements and not cleanliness.

b The fee arrangement caused a conflict of interest for the financial statements in that the auxiliary fees were larger and the profit on these items made it look like a bribe for the audit.

c Both a and b.

d None of the above.