AICPA Exam CPA-Auditing Topic 1 Question 84 Discussion

Actual exam question for AICPA's CPA Auditing and Attestation exam

Question #: 84
Topic #: 1

[All CPA Auditing and Attestation Questions]

The GAO standards of reporting for governmental financial audits incorporate the AICPA standards of reporting and prescribe supplemental standards to satisfy the unique needs of governmental audits.

Which of the following is a supplemental reporting standard for governmental financial audits?

AAuditors should report the scope of their testing of compliance with laws and regulations and of internal controls.

BMaterial indications of illegal acts should be reported in a document distributed only to the entity's senior officials.

CAll changes in the audit program from the prior year should be reported to the entity's audit committee.

DAny privileged or confidential information discovered should be reported to the organization that arranged for the audit.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. The auditor's report on compliance and on internal control over financial recording (based on an audit) must include the scope of testing of compliance and internal control.

Choice 'b' is incorrect. Material indications of illegal acts are not only reported to the members of the governing body of the audited entity and their senior staff officials but, in some circumstances, auditors should report illegal acts directly to external parties (such as the grantor agency).

Choice 'c' is incorrect. Although GAO standards require that the auditor communicate information regarding the nature, timing and extent of planned testing to officials of the audited entity and to individuals contracting for the audit, reporting of all changes is not required. (For example, immaterial changes to the audit program need not be reported.)

Choice 'd' is incorrect. Certain privileged or confidential information may be prohibited from general disclosure and should not be included in the audit report. The report should, however, disclose the nature of the information omitted and the requirement that makes an opinion necessary.

by Serina at Apr 10, 2024, 02:38 PM

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17 days ago

Hmm, this is an interesting question. I think it's important to understand the nuances of governmental financial audits and how they differ from standard AICPA audits. The supplemental reporting standards are crucial to satisfying the unique needs of these types of audits.

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