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
A CPA is asked by a client's lender to confirm the client's financial health orally over the phone without a written report. The CPA should:
Answer: Decline and explain that professional standards require written reports for such communications
Providing oral assurance or confirmation to third parties creates professional liability and violates attestation standards that require formal written reports for assurance on financial matters.
When a CPA disagrees with a client's accounting policy that, while acceptable, is not the CPA's preferred method, the appropriate communication is to:
Answer: Discuss the preference with management but issue an unmodified opinion if the policy is acceptable under GAAP
A CPA may express a preference while respecting management's right to select among acceptable GAAP alternatives; an unmodified opinion is appropriate when the chosen policy conforms to GAAP.
An audit client asks the CPA to provide a reference letter for a key employee who is leaving the firm. The CPA should:
Answer: Provide only factually verifiable statements and avoid speculative assessments
When providing reference letters, CPAs should limit statements to objectively verifiable facts to avoid defamation claims and misrepresentation, including only what they can substantiate.
Under the Sarbanes-Oxley Act, which party must communicate internal control deficiencies to the audit committee of a public company?
Answer: The external auditor, who must report directly to the audit committee
SOX Section 204 requires external auditors of public companies to report critical accounting policies, alternative treatments, and material communications directly to the audit committee.
A CPA firm's quality control partner reviews an engagement and disagrees with the audit conclusion. This review occurs BEFORE the report is issued. The engagement team should:
Answer: Resolve the disagreement before issuing the report
PCAOB AS 2101 and AICPA quality control standards require that disagreements within the engagement team be resolved before the audit report is issued.
A CPA receives a request from a journalist to comment on a client's financial condition for a news article. The MOST appropriate response is to:
Answer: Decline to comment and refer the journalist to the client
Even confirming or denying a client relationship violates AICPA confidentiality rules; the CPA should decline all comment and direct inquiries to the client.
A CPA preparing a business valuation report must include in the report a statement that:
Answer: The assumptions and limiting conditions underlying the valuation are disclosed
SSVS No. 1 requires valuation reports to include a description of the assumptions and limiting conditions that affected the analysis and conclusions.