AICPA Exam CPA-Auditing Topic 2 Question 53 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 53
Topic #: 2

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:

ADisclaim an opinion as to management's cost-benefit statement.

BAdvise the Board that Bell either agrees or disagrees with management's statement.

CAdvise management that Bell's report was restricted for use only by management.

DAdvise both management and the Board that Bell was withdrawing the opinion.

Show Suggested Answer

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 Bobbye at Jun 17, 2022, 06:35 AM

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