Certified Public Accountant Communication & Stakeholder Relations 4

Question 1

A CPA providing attest services learns information that suggests a client is engaged in money laundering. Under the Bank Secrecy Act, CPAs in most states:

Accepted Answer

Are generally not required to file SARs but should consult legal counsel

Answer

Unlike financial institutions, CPAs are not generally required to file SARs, but they face potential criminal liability and should consult legal counsel about their obligations and consider withdrawal.

Question 2

When issuing a comfort letter to an underwriter in connection with a securities offering, the CPA's primary communication responsibility is to:

Accepted Answer

Provide negative assurance on unaudited financial information for the period after the audit date

Answer

AU-C Section 920 specifies that comfort letters provide negative assurance on interim unaudited financial information, not a guarantee or positive assurance.

Question 3

A CPA is advising a client on a transaction that may qualify for a tax shelter. Under Circular 230, the CPA must:

Accepted Answer

Ensure advice is based on reasonable assumptions and clearly states the limits of the analysis

Answer

Circular 230 Section 10.37 requires tax shelter advice to be based on reasonable factual and legal assumptions and clearly identify limitations on reliance.

Question 4

Which of the following BEST describes the CPA's communication responsibility when an engagement letter scope change occurs mid-project?

Accepted Answer

Issue a new engagement letter or written amendment documenting the changed scope

Answer

Professional standards and risk management best practices require scope changes to be documented in writing, either through an amended or new engagement letter, to avoid misunderstandings.

Question 5

A CPA serving on a nonprofit board must disclose a potential conflict of interest to other board members primarily because:

Accepted Answer

Board members owe fiduciary duties that require transparency about personal interests that could bias decisions

Answer

Fiduciary duty requires board members to act in the nonprofit's best interest, and undisclosed conflicts of interest violate this duty regardless of SEC rules.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Communication & Stakeholder Relations 4