Communication & Stakeholder Relations Flashcards
7 cards from real Certified Public Accountant 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 & Stakeholder Relations flashcards as text
During an audit, a CPA suspects that management's representations in the representation letter may be false. The MOST appropriate response is to:
Answer: Perform additional audit procedures to corroborate management's representations
When representations appear doubtful, AU-C Section 580 requires the auditor to perform additional procedures to obtain sufficient appropriate audit evidence rather than relying solely on the letter.
A CPA firm partner learns that a key client intends to file for bankruptcy. This information was obtained through the audit. The partner MAY disclose this information to:
Answer: No one outside the firm without the client's consent or legal requirement
AICPA Rule 1.700.001 prohibits CPAs from disclosing confidential client information without the client's specific consent except in very limited circumstances such as legal requirements.
When communicating significant deficiencies to those charged with governance, the CPA must:
Answer: Provide the communication in writing
AU-C Section 265 explicitly requires that significant deficiencies and material weaknesses be communicated in writing to those charged with governance.
A CPA acting as a forensic accountant testifying as an expert witness must ensure their testimony is:
Answer: Objective, based on sufficient data, and within their area of expertise
AICPA forensic standards and FRE 702 require expert testimony to be objective, grounded in sufficient facts or data, and within the expert's area of specialized knowledge.
A publicly traded client's CFO pressures the audit engagement partner to change an audit conclusion. The MOST appropriate action is to:
Answer: Document the disagreement and escalate within the firm per quality control procedures
When management pressures auditors, PCAOB and AICPA standards require documentation of disagreements and escalation through the firm's quality control hierarchy to protect audit quality.
A CPA discovers that a predecessor auditor's report contained a material error. The CPA's obligation is to:
Answer: Inform the predecessor auditor of the discovered error
Per AU-C Section 510, when a successor auditor discovers errors in predecessor work, the appropriate step is to communicate with the predecessor auditor who issued the report.
In a compilation engagement, the CPA's report must include a statement that the CPA:
Answer: Has not audited or reviewed the statements and expresses no opinion or assurance
SSARS No. 21 requires the compilation report to state clearly that the CPA has not audited or reviewed the financial statements and accordingly expresses no opinion or other form of assurance.