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Which of the following statements is correct concerning significant deficiencies noted in an audit of a nonissuer?
Suggested Answer: D
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Choice 'd' is correct. The auditor should separately identify those significant deficiencies that are considered to be material weaknesses.
Choice 'a' is incorrect. Not all significant deficiencies are material weaknesses.
Choice 'b' is incorrect. The auditor is not obligated to search for significant deficiencies. The auditor is obligated to communicate to the client any significant deficiencies identified while auditing the financial statements.
Choice 'c' is incorrect. The auditor is obligated to re-communicate significant deficiencies each year, even if management has acknowledged its understanding of such deficiencies.
30 comments · newest first
PU
Pura
10 months ago
D seems right, auditors need to clarify material weaknesses.
AS
Ashlyn
11 months ago
Wait, are we really not re-communicating them if management knows?
AR
Aron
11 months ago
I thought we had to report all deficiencies every year?
AN
Anthony
11 months ago
Totally agree, option A is misleading!
FL
Flo
11 months ago
A significant deficiency isn't the same as a material weakness.
DI
Dianne
12 months ago
I recall that significant deficiencies should be communicated every year, regardless of management's acknowledgment, so I think C is definitely incorrect.
ST
Stanford
12 months ago
I practiced a similar question where we had to identify the differences between deficiencies and weaknesses, so I’m leaning towards D, but I’m not completely confident.
DE
Delfina
12 months ago
I think option B sounds familiar because we discussed the auditor's responsibilities in class, but I’m a bit confused about the wording.
GR
Graciela
1 year ago
I remember that significant deficiencies are not the same as material weaknesses, but I’m not sure if they should be reported differently.
LI
Ligia
1 year ago
Okay, I remember from class that significant deficiencies are a step below material weaknesses in terms of severity. I'll use that knowledge to try to figure out the correct answer here.
DA
Dalene
1 year ago
Hmm, I'm a little unsure about the distinction between significant deficiencies and material weaknesses. I'll need to review my notes to make sure I understand the definitions before answering this.
KE
Kendra
1 year ago
I'm pretty confident I know the difference between significant deficiencies and material weaknesses, so I think I can tackle this question.
BA
Barrett
1 year ago
This question is testing our understanding of internal control reporting requirements. I'll need to carefully read through the answer choices and think about which one best describes the auditor's responsibilities regarding significant deficiencies.
MA
Marta
1 year ago
Okay, I've got this. The InfoLocker feature is designed to support the one write and multiple read use case, so the answer should be True. I'm confident in this.
BE
Benton
1 year ago
I'm pretty confident about this one. Capitation is a fixed payment per patient, so the option that doesn't fit is the pay-for-reporting model, which is a different payment structure. That's my final answer.
JO
Joana
2 years ago
Haha, significant deficiencies? More like 'significantly hilarious' deficiencies, am I right? Anyway, I'd go with A.
MA
Marci
2 years ago
C seems wrong to me. Significant deficiencies should be communicated each year, even if management is aware of them.
OR
Oretha
2 years ago
D) The auditor should separately identify those significant deficiencies that are considered to be material weaknesses.
KA
Kallie
2 years ago
C) I agree, significant deficiencies should be communicated each year, regardless of management's awareness.
MI
Micheline
2 years ago
B) The auditor is obligated to search for significant deficiencies that could adversely affect the entity's ability to record and report financial data.
LE
Leslie
2 years ago
A) Significant deficiencies are material weaknesses in the design or operation of specific internal control components.
EL
Elmira
2 years ago
I'm going with D. The auditor should clearly distinguish between significant deficiencies and material weaknesses.
BE
Belen
2 years ago
I think B is the correct answer. The auditor has a responsibility to identify any significant deficiencies that could affect the entity's financial reporting.
WI
Willard
2 years ago
B) The auditor is obligated to search for significant deficiencies that could adversely affect the entity's ability to record and report financial data.
BU
Buffy
2 years ago
A) Significant deficiencies are material weaknesses in the design or operation of specific internal control components.
DE
Devon
2 years ago
I see your point, but D is more specific about material weaknesses.
WI
Willetta
2 years ago
I agree with Irma, B seems like a valid point.
IR
Irma
2 years ago
But doesn't B also make sense? The auditor should search for deficiencies.
DE
Devon
2 years ago
I disagree, I believe it's D.
IR
Irma
2 years ago
I think the correct statement is A.