AICPA CPA-Auditing Exam - Topic 3 Question 43 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 43
Topic #: 3

[All CPA-Auditing Questions]

Which of the following matters is an auditor not required to communicate to those charged with governance?

ASignificant adjustments arising from the audit that were recorded by management.

BThe basis for the auditor's conclusions about the reasonableness of management's sensitive accounting estimates.

CThe level of responsibility assumed by the auditor under generally accepted auditing standards.

DThe degree of reliance the auditor placed on the management representation letter.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. The auditor is not required to communicate to those charged with governance the degree of reliance placed on the management representation letter.

Choice 'a' is incorrect. Unless all those charged with governance are also involved with managing the entity, the auditor should inform those charged with governance about adjustments arising from the audit, regardless of whether or not management recorded them.

Choice 'b' is incorrect. The auditor should communicate qualitative aspects of the process used by management in formulating sensitive accounting estimates, which would likely include discussion of the basis for the auditor's conclusions regarding the reasonableness of those estimates.

Choice 'c' is incorrect. The auditor should communicate the level of responsibility that he/she is assuming under GAAS.

by Selma at May 07, 2022, 01:26 PM

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5 months ago

I think the key here is to minimize costs, so I'll focus on the most cost-effective solution that still meets the requirements.

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