Certified Public Accountant Communication & Stakeholder Relations 3

Question 1

During an audit, a CPA suspects that management's representations in the representation letter may be false. The MOST appropriate response is to:

Accepted Answer

Perform additional audit procedures to corroborate management's representations

Answer

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.

Question 2

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:

Accepted Answer

No one outside the firm without the client's consent or legal requirement

Answer

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.

Question 3

When communicating significant deficiencies to those charged with governance, the CPA must:

Accepted Answer

Provide the communication in writing

Answer

AU-C Section 265 explicitly requires that significant deficiencies and material weaknesses be communicated in writing to those charged with governance.

Question 4

A CPA acting as a forensic accountant testifying as an expert witness must ensure their testimony is:

Accepted Answer

Objective, based on sufficient data, and within their area of expertise

Answer

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.

Question 5

A publicly traded client's CFO pressures the audit engagement partner to change an audit conclusion. The MOST appropriate action is to:

Accepted Answer

Document the disagreement and escalate within the firm per quality control procedures

Answer

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.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Communication & Stakeholder Relations 3