Final answer:
Management's preoccupation with meeting specific profitability targets during the client acceptance phase for an audit affects the integrity of management factor. This concern can lead to increased audit risk and affects the auditor's decision to accept the client.
Step-by-step explanation:
When considering client acceptance for the audit of Jako Corp, and recognizing that management is preoccupied with meeting specific profitability targets, this preoccupation can indeed affect one of the factors related to client acceptance. The factor in question here is the integrity of management. Such a scenario indicates that there might be a pressure on management to achieve these targets, which could lead to a higher risk of financial statement misrepresentation or even fraud. This risk is a crucial consideration for an auditor because it can influence the overall audit strategy and the amount of scrutiny required during the audit.
Management integrity is a foundational element in the audit process, not just in gaining an understanding of the company's business and environment, but also in making an assessment of the risks of material misstatement in the financial statements. An auditor must have confidence in the management's representations and believe that all significant information will be disclosed during the audit. If an auditor has concerns about management's integrity, they might consider this as a significant audit risk or may decide whether to accept the client at all. So, to answer the student's question directly, management's preoccupation with meeting specific profitability targets affects the integrity of management factor during the client acceptance phase of an audit. The auditor must carefully consider this alongside other factors such as competence, special circumstances and unusual risks, and independence to make an informed decision about whether to accept Jako Corp as a client.