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AICPA CPA-Auditing Exam - Topic 1 Question 94 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 94
Topic #: 1
[All CPA-Auditing Questions]

Which of the following factors most likely would cause a CPA to decide not to accept a new audit engagement?

Show Suggested Answer Hide Answer
Suggested Answer: A

Choice 'a' is correct. The auditor should disclaim an opinion as to management's cost-benefit statement (i.e., 'We do not express an opinion or any other form of assurance on management's cost-benefit statement.').

Choice 'b' is incorrect. The CPA should disclaim an opinion regarding management's representation.

Choice 'c' is incorrect. The CPA's report on internal control is not restricted as to use.

Choice 'd' is incorrect. The CPA does not need to withdraw the opinion as long as a disclaimer on management's cost-benefit statement is presented.


by Amalia at Aug 05, 2024, 11:09 PM

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Jordan
3 months ago
Yeah, if management won't let you test controls, why even bother?
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Kristin
3 months ago
I thought understanding internal audit techniques was important?
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Matthew
3 months ago
Wait, are we sure about that? Seems like there could be other factors too.
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Cecilia
4 months ago
Totally agree, that's a dealbreaker for sure.
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Arlette
4 months ago
Management's disregard for internal controls is a huge red flag!
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Shay
4 months ago
I thought related party transactions were important, but I guess they don't really affect the decision to accept a client? That’s a bit confusing.
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Dortha
4 months ago
I practiced a similar question where management's refusal to allow tests was a big deal. It seems like that would be a major reason to walk away from an engagement.
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Eden
4 months ago
I’m not entirely sure, but I think the CPA's understanding of internal audit techniques isn’t as critical as management’s control environment.
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Eric
5 months ago
I remember discussing how management's responsibility for internal controls is crucial. If they disregard it, it definitely raises red flags for the CPA.
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Mabel
5 months ago
Definitely the management's disregard of internal controls. That's a huge red flag that would make me very hesitant to accept the engagement. The other options don't seem as directly relevant to the CPA's decision-making process.
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Vallie
5 months ago
Hmm, this is a good question. I'd say the management's disregard of internal controls is the biggest issue. That really compromises the reliability of the financial reporting, which is a huge risk factor for the CPA.
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Pearline
5 months ago
The key here is understanding the importance of the control environment. If management isn't taking responsibility for maintaining adequate internal controls, that's a major concern that would likely cause me to decline the engagement.
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Dolores
5 months ago
This is a tricky one. I'd need to really think through the factors that could lead a CPA to decline an audit engagement. Management's disregard of internal controls seems like the most significant red flag here.
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Rusty
5 months ago
Hmm, I'm a bit unsure about the Exponential distribution here. I'll need to double-check if that's part of the generalized extreme value family.
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Alison
9 months ago
Related party transactions? More like 'related party shenanigans' if the client tries to hide them from the auditor!
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Suzi
8 months ago
User 3
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Geraldo
8 months ago
User 2
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William
8 months ago
User 1
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Garry
10 months ago
Wait, so they can't do substantive tests before year-end? That's like trying to finish your homework the night before it's due!
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Lashon
8 months ago
Doing substantive tests before year-end could lead to inaccurate results.
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Helaine
9 months ago
It's important to have accurate information before conducting those tests.
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Erinn
9 months ago
That's right, they need the financial statements to be finalized before performing substantive tests.
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Celestina
10 months ago
I guess the auditor doesn't need to understand the internal auditor's techniques, as long as they can still do their job effectively.
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Carol
9 months ago
C: It's important for the CPA to have confidence in the client's internal controls before starting an audit.
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Rodrigo
10 months ago
B: Yeah, that could definitely make a CPA think twice about taking on a new audit engagement.
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Gladys
10 months ago
A: Management's disregard of its responsibility to maintain an adequate internal control environment is a big red flag.
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Kirby
10 months ago
I'd be wary of a client who doesn't take internal controls seriously. That's a red flag for potential misstatements.
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Diego
8 months ago
It's important to have a strong control environment for accurate financial statements.
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Aleisha
8 months ago
The CPA might decide not to take on the audit engagement in that case.
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Sanjuana
8 months ago
Yeah, that could lead to unreliable financial reporting.
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Lore
10 months ago
It's definitely a concern if management doesn't care about internal controls.
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Naomi
10 months ago
Exactly. It's important for the CPA to ensure reliable financial reporting.
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Yuki
10 months ago
Hmm, this question really highlights the importance of the control environment. I'll make sure to review that thoroughly in my studies.
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Lisha
10 months ago
Definitely, management's responsibility in maintaining internal controls cannot be overlooked.
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Julio
10 months ago
Yes, the control environment is crucial for ensuring reliable financial reporting.
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Rolland
11 months ago
I agree. If management doesn't take internal control seriously, it's a red flag.
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Naomi
11 months ago
I think the answer is B.
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