Communication with Teachers & Parents Flashcards
7 cards from real AICPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Communication with Teachers & Parents flashcards as text
A CPA is asked by a supervisor to omit a going-concern paragraph from an audit report to avoid upsetting the client. What is the correct response?
Answer: Refuse, as doing so would violate professional standards and could constitute fraud
Omitting a required going-concern explanatory paragraph when conditions warrant it violates GAAS and could constitute fraud in the preparation of audit reports.
What is the purpose of a management representation letter in an audit engagement?
Answer: It documents management's written acknowledgment of its responsibilities and representations made to the auditor
A management representation letter formally documents that management has provided complete information and confirms specific representations that support the auditor's conclusions.
When teaching staff about fraud risk communication, which scenario best illustrates a 'brainstorming session' as required by AU-C Section 240?
Answer: The audit team collectively discusses how and where the financial statements might be susceptible to fraud
AU-C 240 requires the audit team to hold a brainstorming discussion to identify areas where fraud risks exist, encouraging open sharing of ideas among team members.
A CPA firm's quality control policies require engagement partners to review all significant judgments made by staff. This requirement stems from which AICPA standard?
Answer: QC Section 10 (SQCS No. 8)
SQCS No. 8 (QC Section 10) establishes quality control standards requiring firms to implement policies for engagement performance, including review of significant judgments.
Under what circumstance should a CPA send a separate written communication about internal control deficiencies rather than including them only verbally?
Answer: When deficiencies rise to the level of significant deficiencies or material weaknesses
AU-C 265 requires significant deficiencies and material weaknesses to be communicated in writing to those charged with governance.
A CPA instructor explains the difference between a 'disclaimer of opinion' and an 'adverse opinion.' Which scenario leads to an adverse opinion?
Answer: The financial statements are materially and pervasively misstated
An adverse opinion is issued when the auditor concludes the financial statements are materially and pervasively misstated, while a disclaimer results from inability to obtain sufficient evidence.
In a CPA review engagement, what type of communication represents the highest level of assurance available under SSARS standards?
Answer: Negative assurance that nothing came to the accountant's attention indicating material modification is needed
Under SSARS, a review engagement provides limited (negative) assurance, which is the highest level available within the SSARS framework — still below audit-level assurance.