AICPA CPA-Auditing Exam - Topic 3 Question 54 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 54
Topic #: 3

Which of the following statements concerning material weaknesses and significant deficiencies is correct with respect to an audit of a nonissuer?

AAn auditor need not identify and communicate material weaknesses separately from significant deficiencies.

BAll material weaknesses are significant deficiencies.

CAn auditor should report immediately material weaknesses and significant deficiencies discovered during an audit.

DAll significant deficiencies are material weaknesses.

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. A material weakness in internal control is a significant deficiency that results in more than a remote likelihood that a material misstatement in the financial statements will not be prevented or detected.

Choice 'a' is incorrect. The auditor is required to separately identify and communicate significant deficiencies and material weaknesses.

Choice 'c' is incorrect. Significant deficiencies (including material weaknesses) are generally communicated to the appropriate parties after the audit is complete. They may, at the auditor's discretion, be communicated during the audit, but there is no requirement for immediate communication.

Choice 'd' is incorrect. A material weakness is a significant deficiency that results in more than a remote likelihood that a material misstatement in the financial statements will not be prevented or detected. Not all significant deficiencies will meet this description.

by Tresa at Jun 23, 2022, 12:27 PM

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Adaline

4 months ago

Just to clarify, material weaknesses are a bigger deal than significant deficiencies.

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Shoshana

4 months ago

Wait, are all significant deficiencies really material weaknesses? That sounds off.

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Dannie

4 months ago

I think C makes sense, auditors should report issues right away.

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Noemi

4 months ago

I disagree, A is misleading. They should be reported separately!

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Trinidad

4 months ago

B is correct, all material weaknesses are indeed significant deficiencies.

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Venita

5 months ago

I’m pretty certain that not all significant deficiencies are material weaknesses, but I can't recall the exact reasoning behind it.

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Cristen

5 months ago

I’m a bit confused about whether auditors need to report deficiencies immediately or if they can wait until the end of the audit.

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Deangelo

5 months ago

I think I remember that all material weaknesses are indeed significant deficiencies, but I'm not entirely sure if that means the reverse is true.

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Devorah

5 months ago

I feel like we practiced a question similar to this, and I think the auditor does need to communicate material weaknesses separately.

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Tawny

5 months ago

Honestly, I'm a little confused by all these options. They all seem like they could work, but I'm not sure which one is the most efficient or reliable. I guess I'd lean towards option D and use the console to write the mock messages, since that feels the most straightforward.

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Fernanda

5 months ago

The Streaming API option sounds interesting, but I'm not sure if that's the best fit for this scenario. Might be overkill for a simple roll-up.

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Earnestine

5 months ago

I'm a bit confused on this one. I know the interface could be shut down, but I'm not sure about the other reasons. I'll need to carefully consider each option.

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