Discuss AICPA CPA-Auditing Exam Topic 3 Question 43

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.

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.

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8 comments · newest first

Stephen 11 months ago

I thought they had to share everything, but C makes sense.

Maryann 12 months ago

D is also not something I’d expect them to communicate.

Katlyn 12 months ago

Wait, are you sure about C? That seems important to me.

Krissy 12 months ago

I agree, C seems like the right choice here.

Ora 1 year ago

I think it's definitely C. Not required to communicate that.

Emilio 1 year ago

I'm a little confused by this question. I'll need to re-read it a few times and maybe even jot down some notes to help me work through the different scenarios.

Myong 1 year ago

This question seems straightforward, but I want to make sure I understand the Inter-AS model VPRN setup before answering.

Jessenia 1 year 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.

AICPA CPA-Auditing Exam - Topic 3 Question 43 Discussion