Question

Which of the following best describes whether a CPA has met the required standard of care in auditing an entity's financial statements?

1) Whether the client's expectations are met with regard to the accuracy of audited financial statements.
2) Whether the statements conform to generally accepted accounting principles.
3) Whether the CPA conducted the audit with the same skill and care expected of an ordinarily prudent CPA under the circumstances.
4) Whether the audit was conducted to investigate and discover all acts of fraud.

Answer 1

The required standard of care in auditing an entity's financial statements is whether the CPA conducted the audit with the same skill and care expected of an ordinarily prudent CPA under the circumstances.

Step-by-step explanation:

The correct answer to this question is option 3) Whether the CPA conducted the audit with the same skill and care expected of an ordinarily prudent CPA under the circumstances.

This best describes whether a CPA has met the required standard of care in auditing an entity's financial statements. It focuses on the CPA's professional conduct, ensuring that they have performed the audit with the level of skill and care that would be expected of a reasonably competent CPA in similar circumstances.

Options 1 and 2 are relevant to the accuracy and adherence to accounting principles, but they do not directly address the standard of care in auditing. Option 4, investigating and discovering all acts of fraud, is a component of an audit, but it does not encompass the entire standard of care.