Question

Under AICPA rules, which statement best describes the period of the professional engagement as it applies to a three-year engagement to audit a client's financial statements?
A. It begins each year when fieldwork commences and ceases when fieldwork ends.
B. It begins when fieldwork commences and ceases when the report is issued, recommencing when fieldwork begins again for the next period.
C. It begins when the engagement letter is signed and ceases each year when the report is issued.
D. It begins when the engagement letter is signed and continues until the report for the third year is issued unless the relationship is terminated sooner.

Answer 1

Answer: The correct answer is "D. It begins when the engagement letter is signed and continues until the report for the third year is issued unless the relationship is terminated sooner.".

Explanation: The statement "It begins when the engagement letter is signed and continues until the report for the third year is issued unless the relationship is terminated sooner." best describes the period of the professional engagement as it applies to a three-year engagement to audit client's financial statements since this type of professional commitment begins with the signing of the document that formalizes the commitment and is in force until the issuance of the last report unless the relationship is resolved beforehand by another circumstance.