Question

You are in client acceptance phase for the audit of Jako Corp. You have determined that Jako has a weak accounting system with few internal controls. Which of the following factors related to client acceptance does this affect?

1) Competence
2) Integrity of management
3) Special circumstances and unusual risks
4) Independence

Answer 1

The weak accounting system and lack of internal controls in Jako Corp affect the factor of Competence in client acceptance for the audit.

Step-by-step explanation:

The weak accounting system and lack of internal controls in Jako Corp would affect the factor of Competence in client acceptance for the audit. Competence refers to the ability of the client's management and accounting system to produce accurate and reliable financial information. The weak accounting system and few internal controls indicate a lack of competence in Jako Corp's financial reporting processes.