Question

When safeguards are applied to reduce a threat to an acceptable level, the best practice calls for the CPA to?

1) Document the identified threats and applied safeguards.
2) Decrease the audit fees to the client.
3) None of the choices is correct.
4) Continue investigating the threat until a solution is found.

Answer 1

The correct answer is option 1. The best practice for a CPA when safeguards are applied to reduce a threat to an acceptable level is to document the identified threats and applied safeguards.

Step-by-step explanation:

When safeguards are applied to reduce a threat to an acceptable level, the best practice calls for the CPA to: Document the identified threats and applied safeguards.

Documentation is important as it provides a record of the identified threats and the safeguards that were implemented to mitigate those threats. This documentation helps in evaluating the effectiveness of the safeguards and ensures transparency in the audit process.

Decreasing the audit fees to the client (option 2) or continuing to investigate the threat until a solution is found (option 4) are not the recommended actions for a CPA in this situation.