Certified Public Accountant Communication & Stakeholder Relations 5

Question 1

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:

Accepted Answer

Decline and explain that professional standards require written reports for such communications

Answer

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.

Question 2

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:

Accepted Answer

Discuss the preference with management but issue an unmodified opinion if the policy is acceptable under GAAP

Answer

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.

Question 3

An audit client asks the CPA to provide a reference letter for a key employee who is leaving the firm. The CPA should:

Accepted Answer

Provide only factually verifiable statements and avoid speculative assessments

Answer

When providing reference letters, CPAs should limit statements to objectively verifiable facts to avoid defamation claims and misrepresentation, including only what they can substantiate.

Question 4

Under the Sarbanes-Oxley Act, which party must communicate internal control deficiencies to the audit committee of a public company?

Accepted Answer

The external auditor, who must report directly to the audit committee

Answer

SOX Section 204 requires external auditors of public companies to report critical accounting policies, alternative treatments, and material communications directly to the audit committee.

Question 5

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:

Accepted Answer

Resolve the disagreement before issuing the report

Answer

PCAOB AS 2101 and AICPA quality control standards require that disagreements within the engagement team be resolved before the audit report is issued.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Communication & Stakeholder Relations 5