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Under SA 210, which of the following is a "precondition for an audit"?
AInternal-audit report from prior year
BEngagement partner's rotation status
CUse of an acceptable financial reporting framework AND management's acknowledgment of its responsibilities
DManagement's agreement to pay the fee
Answer & Solution
Correct answer: D. Management's agreement to pay the fee
1. SA 210.4 defines two preconditions: acceptable framework and management acknowledgment.
2. Fee, internal audit, and partner rotation are not preconditions.
3. Absence of preconditions can lead to declining the engagement.
_Source: ICAI BoS CA Final Paper 3, Ch 2 "Audit Planning Strategy and Execution"_
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