Discuss AICPA CPA-Auditing Exam Topic 2 Question 53

The management of Cain Company, a nonissuer, engaged Bell, CPA, to express an opinion on Cain's internal control. Bell's report described several material weaknesses and potential errors and irregularities that could occur. Subsequently, management included Bell's report in its annual report to the Board of Directors with a statement that the cost of correcting the weaknesses would exceed the benefits. Bell should:

ADisclaim an opinion as to management's cost-benefit statement.

BAdvise the Board that Bell either agrees or disagrees with management's statement.

CAdvise management that Bell's report was restricted for use only by management.

DAdvise both management and the Board that Bell was withdrawing the opinion.

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.

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13 comments · newest first

Bettina 11 months ago

Management's statement seems risky, not sure it's the right move.

Carey 11 months ago

I think Bell should just disclaim the opinion.

Lennie 12 months ago

Wait, how can they say costs exceed benefits without proof?

Catherin 12 months ago

Totally agree, they need to take those weaknesses seriously!

Ashlyn 12 months ago

Bell's report highlighted material weaknesses.

Mica 1 year ago

I think Bell should restrict the use of the report to management only, but I'm not entirely confident. It seems like a safer option given the material weaknesses mentioned.

Marva 1 year ago

I’m a bit confused about whether Bell should advise the Board on management's statement or just stick to the report. I feel like both options could be valid.

Marica 1 year ago

This question feels similar to one we practiced about auditor responsibilities when management makes certain claims. I think Bell might need to disclaim an opinion.

Nida 1 year ago

I remember discussing the importance of understanding the implications of management's cost-benefit analysis in class, but I'm not sure how it affects Bell's opinion.

Almeta 1 year ago

Hmm, I'm not too sure about this one. The options don't seem to be directly related to email analysis tools. I'll have to think this through carefully before making a decision.

Paulina 1 year ago

This looks like a tricky question, but I think I can figure it out. Let me think through the key concepts step-by-step.

Mertie 1 year ago

Okay, let me think this through step-by-step. I'll need to implement the core functions like totalSupply, balanceOf, transfer, and transferFrom, as well as the approval-related functions and events. I've got this!

Lasandra 1 year ago

Okay, I remember learning about the main types of security policies in class. I'll try to apply that knowledge here.

AICPA CPA-Auditing Exam - Topic 2 Question 53 Discussion