Question

The primary purpose of establishing quality control policies and procedures for deciding on client evaluation is to __________.

• A. Ensure adherence to generally accepted auditing standards
• B. Acceptance or retention of clients whose management does not lack integrity
• C. Ensure audit fees is charged according to the types of audit work assigned
• D. All of the above

Answer 1

Answer: (B)

Acceptance or retention of clients whose management does not lack integrity

If the management lacks integrity, it does not lead to a good audit and that would in turn be cheating on the shareholders/stakeholders who rely on the financial statements and other information provided by the client.

Hence, client evaluation is an essential exercise to establish quality control policies and procedures before starting an audit.