a small cpa firm provides audit services to a large local company. almost 80% of

Question

a small cpa firm provides audit services to a large local company. almost 80% of the cpa firms revenues comes from this client. which statement is most likely to be true ?
1. appearance of independence may be lacking
2. the small cpa firm does not have proficinecy to perform a larger audit
3. the situation is satisfactory if the auditor exercises due skeptical negative assurance care in the audit
4. the auditor should provide am "emphasis of a matter paragraph" to his/her audit report adequately disclosing this information and then it may issue an unqualified opinion

Explanation / Answer

1. appearance of independence may be lacking
2. the small cpa firm does not have proficinecy to perform a larger audit
3. the situation is satisfactory if the auditor exercises due skeptical negative assurance care in the audit
4. the auditor should provide am "emphasis of a matter paragraph" to his/her audit report adequately disclosing this information and then it may issue an unqualified opinion

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