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AICPA Exam CPA-Auditing Topic 2 Question 102 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 102
Topic #: 2
[All CPA-Auditing Questions]

During an engagement to review the financial statements of a nonissuer an accountant becomes aware of a material departure from GAAP. If the accountant decides to modify the standard review report because management will not revise the financial statements, the accountant should:

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Suggested Answer: B

Choice 'b' is correct. Any report issued on significant deficiencies should indicate that providing assurance on internal control was not the purpose of the audit.

Choice 'a' is incorrect. The auditor should communicate significant deficiencies to management and those charged with governance, but is not required to request a meeting with management one level above the source of the reportable conditions, to discuss suggestions for remedial action.

Choice 'c' is incorrect. Significant deficiencies discovered and communicated at an interim date do not need to be reexamined with tests of controls before completing the engagement.

Choice 'd' is incorrect. Suggestions concerning administration efficiencies and business strategies may be communicated in the same report with significant deficiencies (the significant deficiencies must be separately identified, however).


by Amber at Oct 18, 2024, 10:36 PM

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Ngoc
12 days ago
Option E: Burn the books and start over. That's the only way to be sure there's no GAAP departure. Or, you know, just roll with it - who needs accounting rules anyway?
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Brinda
13 days ago
Option A is tempting, but negative assurance? Really? That's like a doctor saying 'You're not healthy, but hey, at least you're not dead!'
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Katina
15 days ago
Option D is just plain wrong. We can't express positive assurance on principles that don't conform to GAAP. That's like putting lipstick on a pig.
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Una
18 days ago
I'm leaning towards Option C. If the departure is material, we have to issue an adverse or qualified opinion. Anything less would be misleading.
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Stephaine
20 days ago
Option B is the way to go. We need to be transparent about the GAAP departure, even if management is being stubborn.
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Annett
1 days ago
B) Disclose the departure from GAAP in a separate paragraph of the report.
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Fletcher
2 months ago
I'm not sure about that. Wouldn't it be better to disclose the departure from GAAP in a separate paragraph of the report, like option B suggests?
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Mollie
2 months ago
I agree with Nobuko. It makes sense to issue a qualified opinion when there is a material departure from GAAP.
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Nobuko
2 months ago
I think the correct answer is C) Issue an adverse or an 'except for' qualified opinion, depending on materiality.
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