Accounting · Engagement Acceptance
Which of the following issues arising during client re-appraisal would most likely cause Rivers & Co to decline the audit engagement?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A request from Severn Co that the audit be carried out during peak season when Rivers & Co works at maximum capacity.
- 2A reply from the outgoing auditors stating they declined to seek reappointment due to a disagreement over accounting policies.✓
- 3Rivers & Co losing a major client, meaning Severn's audit fee would represent 7% of annual firm income.
- 4The engagement letter not being signed immediately by the client.
Correct answer
A reply from the outgoing auditors stating they declined to seek reappointment due to a disagreement over accounting policies.
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