Discuss AICPA CPA-Auditing Exam Topic 2 Question 42

An auditor's communication with those charged with governance is required to include the:

ABasis for the auditor's preliminary judgment about materiality.

BJustification for the auditor's selection of sampling methods.

CDiscussion of disagreements with management about matters that significantly impact the entity's financial statements.

DAssessment of the quality of the entity's earnings as compared to the previous year.

Suggested Answer: C

Choice 'c' is correct. The auditor should discuss with those charged with governance any significant disagreements with management, whether or not satisfactorily resolved, about matters that are significant to the financial statements or to the auditor's report.

Choices 'a' and 'b' are incorrect. There is no requirement that the auditor's communication with those charged with governance include a justification for any of the judgments made in conducting the audit.

Choice 'd' is incorrect. An auditor of an SEC client is required to discuss his or her judgment about the quality of the entity's accounting principles and estimates, not the quality of the entity's earnings. Note too that this requirement does not apply to non-SEC clients, and that no comparison to prior year is required.

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9 comments · newest first

Josefa 11 months ago

B is also crucial, sampling methods can change everything!

Mollie 12 months ago

Wait, are we sure about this? I thought all options were important.

Laurel 12 months ago

I agree with C, disagreements can really affect the financials.

Nenita 12 months ago

I thought it was A, materiality is super important too!

Yoko 1 year ago

Definitely C, that's a key part of the auditor's role.

Ryan 1 year ago

This looks like a straightforward question about the types of analytics data you can collect for an app. I think I've got a good handle on the key features, so I'll carefully review each option.

Julie 1 year ago

Wait, isn't it the opposite? Low utilizers would go for the cheaper HMO, while high users might want more flexibility with the indemnity plan?

Shelton 1 year ago

Wait, do I need to do anything else besides changing the alignment? I want to make sure I'm not missing any other part of the question.

Oretha 1 year ago

Okay, I think the Daubert standard is the one based on a legal precedent, so I'm going to go with that as my answer.

AICPA CPA-Auditing Exam - Topic 2 Question 42 Discussion