1. Which of the following statements is true?

A. Auditors are required to adhere to specific materiality guidelines set by the AICPA.

B. Evidence suggesting fraud or illegal acts may cause the auditor to increase planning materiality.

C. The auditor may decide to use a smaller planning materiality amount if there is evidence that missing analysts’ forecasts have a significant effect on the client’s stock price.

D. The auditor may ignore detected errors that are less than the planning materiality figure set at the start of the engagement.

2: Which of the following procedures is required before accepting a new audit client?

A. Provide an estimate of fees for the audit engagement.

B. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan.

C. Disclose levels of planning materiality to client personnel responsible for financial statement preparation.

D. Make inquiries of the predecessor auditor regarding management's integrity.

3. When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining

A. Whether the predecessor's work should be utilized.

B. Whether, in the predecessor's opinion, the financial statements are materially correct.

C. Whether, in the predecessor's opinion, the company's internal controls have been satisfactory.

D. Whether there are significant concerns about management integrity that would preclude the auditor from accepting the engagement.