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AICPA Exam CPA-Auditing Topic 1 Question 94 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 94
Topic #: 1
[All CPA-Auditing Questions]

The management of Cain Company, a nonissuer, engaged Bell, CPA, to express an opinion on Cain's internal control. Bell's report described several material weaknesses and potential errors and irregularities that could occur. Subsequently, management included Bell's report in its annual report to the Board of Directors with a statement that the cost of correcting the weaknesses would exceed the benefits. Bell should:

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Suggested Answer: A

Choice 'a' is correct. The auditor should disclaim an opinion as to management's cost-benefit statement (i.e., 'We do not express an opinion or any other form of assurance on management's cost-benefit statement.').

Choice 'b' is incorrect. The CPA should disclaim an opinion regarding management's representation.

Choice 'c' is incorrect. The CPA's report on internal control is not restricted as to use.

Choice 'd' is incorrect. The CPA does not need to withdraw the opinion as long as a disclaimer on management's cost-benefit statement is presented.


by Amalia at Aug 05, 2024, 11:09 PM

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Estrella
2 months ago
Even if that's the case, Bell should still advise the Board of their disagreement to ensure transparency.
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Cherry
2 months ago
But what if the cost of correcting the weaknesses really does exceed the benefits?
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Eve
3 months ago
Gotta love how management tries to bury the bad news. Typical corporate shenanigans if you ask me.
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Casie
2 months ago
D) Advise both management and the Board that Bell was withdrawing the opinion.
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Lindsey
2 months ago
B) Advise the Board that Bell either agrees or disagrees with management's statement.
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Flo
2 months ago
A) Disclaim an opinion as to management's cost-benefit statement.
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Chuck
3 months ago
I agree with Estrella. It's important for Bell to provide their opinion on the matter.
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Franklyn
3 months ago
Wait, so Bell is supposed to be the accountant here, right? I'm picturing him like 'Ding dong, the report is withdrawn!' Hilarious.
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Rebbecca
3 months ago
Telling Bell to withdraw the opinion seems a bit drastic. Why not just have them clarify the report's intended use?
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Truman
2 months ago
C) Advise management that Bell's report was restricted for use only by management.
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Iluminada
2 months ago
Telling Bell to withdraw the opinion seems a bit drastic. Why not just have them clarify the report's intended use?
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Kara
2 months ago
B) Advise the Board that Bell either agrees or disagrees with management's statement.
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Deonna
3 months ago
A) Disclaim an opinion as to management's cost-benefit statement.
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Reed
3 months ago
I think Bell should advise the Board directly. They have a right to know the full story, not just what management wants to tell them.
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Veronique
2 months ago
B) Advise the Board that Bell either agrees or disagrees with management's statement.
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Lemuel
2 months ago
I agree, the Board should be informed of all the details.
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Rhea
3 months ago
A) Disclaim an opinion as to management's cost-benefit statement.
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Gilberto
3 months ago
Bell should definitely disclaim an opinion on the cost-benefit statement. That's not within the scope of the engagement.
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Ty
3 months ago
C) Advise management that Bell's report was restricted for use only by management.
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Stephaine
3 months ago
B) Advise the Board that Bell either agrees or disagrees with management's statement.
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Lore
3 months ago
A) Disclaim an opinion as to management's cost-benefit statement.
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Estrella
4 months ago
I think Bell should advise the Board that they disagree with management's statement.
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