AICPA CPA-Auditing Exam - Topic 3 Question 17 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 17
Topic #: 3

Which of the following statements is correct concerning an auditor's required communication with those charged with governance?

AThis communication should include disagreements with management about significant audit adjustments, whether or not satisfactorily resolved.

BIf matters are communicated in writing, the report is appropriate for general use.

CIf matters are communicated in writing, the report is required to be distributed to both those charged with governance and management.

DThis communication is required to occur before the auditor's report on the financial statements is issued.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. An auditor is required to communicate certain matters to those charged with governance, including disagreements with management about significant audit adjustments, whether or not satisfactorily resolved.

Choice 'b' is incorrect. Written communications should include a limitation on the use of the communication.

Choice 'c' is incorrect. The auditor is not required to distribute the report to management, especially since certain matters might be inappropriate for discussion with management.

Choice 'd' is incorrect. The auditor is not required to make the communication before the auditor's report on the financial statements is finalized, as long as the communication occurs on a timely basis. (Note, however, that for audits of issuers, the communication must be made before the auditor's report is filled with the SEC.)

by Blondell at May 08, 2022, 06:41 PM

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5 months ago

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