AICPA Exam CPA-Auditing Topic 1 Question 101 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 101
Topic #: 1

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 Sarina at Sep 19, 2024, 12:29 PM

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Peggie

24 days ago

Auditors have to communicate with 'those charged with governance'? Sounds like they're running a secret society or something!

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Glendora

26 days ago

Haha, this exam is like a game of 'Guess the Correct Answer'! I'll just roll the dice and pick one. Maybe I'll get lucky.

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Annice

27 days ago

Hmm, I think option D is the way to go. This communication should happen before the auditor's report is issued. Wouldn't want to be late to the party!

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Kattie

17 days ago

I agree, option D is correct. Communication with governance should happen before the report is issued.

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Willis

1 months ago

I'd go with option C. The written report should be distributed to both those charged with governance and management.

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Leigha

1 months ago

I'm not sure about that. Isn't the report only for those charged with governance, not for general use?

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2 months ago

I think the correct statement is A.

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