Final answer:
In deciding whether to accept a client for an audit engagement, a CPA should consider the client's financial health, the integrity of management, and the CPA's overall engagement risk. All of these considerations are important to ensure the audit can be conducted properly, making D) All of these choices is the correct answer.
So option (D) is correct.
Step-by-step explanation:
When a Certified Public Accountant (CPA) is assessing whether to accept a client for an audit engagement, several factors need to be considered. These factors ensure that the engagement is within the CPA's ethical and professional boundaries and that there is a reasonable expectation that the engagement can be completed with due professional care. The following are the aspects a CPA should evaluate:
The current financial health of the prospective client: Understanding the client's financial stability is crucial, as it might impact the audit risk and the ability of the CPA to be compensated for their services.
The integrity of management: The honesty and ethical behavior of the client's management are vital in ensuring that the financial information provided is reliable and that the CPA can place trust in the data and the management's representations.
The CPA's overall engagement risk: This includes but is not limited to the client's industry, the complexity of the business, and any potential conflicts of interest. The CPA must be sure that they can maintain professional skepticism and that the engagement does not pose a risk to the CPA's reputation for integrity and objectivity.
Therefore, the accurate answer to the question is D) All of these choices are correct, as each element is an important consideration in the CPA's decision-making process regarding audit engagements.