Discuss AICPA CPA-Auditing Exam Topic 3 Question 36

Because of the pervasive effects of laws and regulations on the financial statements of governmental units, an auditor should obtain written management representations acknowledging that management has:

AIdentified and disclosed all laws and regulations that have a direct and material effect on its financial statements.

BImplemented internal controls designed to detect all illegal acts.

CExpressed both positive and negative assurance to the auditor that the entity complied with all laws and regulations.

DEmployed internal auditors who can report their findings, opinions, and conclusions objectively without fear of political repercussion.

Suggested Answer: A

Choice 'a' is correct. The auditor should obtain written representation that management has disclosed all laws and regulations that have a direct and material effect on its financial statements.

Choice 'b' is incorrect. Management need not acknowledge that it has implemented internal control activities to detect all illegal acts.

Choice 'c' is incorrect. Management should state that it is responsible for compliance with all laws and regulations.

Choice 'd' is incorrect. Management need not employ internal auditors.

Get Premium CPA-Auditing Questions as Interactive Web-Based Practice Test or PDF Real Exam Format Detailed Explanations Instant Access Get Your Practice Test

8 comments · newest first

Lorrine 11 months ago

A is the most straightforward requirement for auditors.

Alline 12 months ago

D sounds great, but can we really trust internal auditors?

Charlene 12 months ago

C seems a bit too optimistic. How can they assure compliance?

Cordelia 12 months ago

I think B is just as important. Internal controls are key!

Tequila 1 year ago

Definitely A! It's crucial to disclose all relevant laws.

Lore 1 year ago

Okay, I think I remember this from class - a collision attack is when you try to find two different messages that hash to the same value, which could potentially allow you to forge digital signatures or other attacks. I'll need to review the specifics, but that's the general idea.

Tamala 1 year ago

I'm a bit confused on this one. I know we need to set up the posting groups, but I'm not sure if it's the Gen. Business Posting Groups, the General Posting Setup, or the Inventory Posting Groups. I'll have to review the material on posting groups again to make sure I understand the differences.

Kayleigh 1 year ago

I'm a bit confused by the wording here. I'll need to review my notes on virtualization and network design patterns to make sure I understand the key terms.

AICPA CPA-Auditing Exam - Topic 3 Question 36 Discussion