CPA Auditing and Attestation (AUD) : Communication with Management
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #11 : Performing Further Procedures
During the course of the audit, the auditor uncovers a serious misappropriation of cash attributed to the senior accountant. This is required to be communicated to
IRS
police
management
audit committee
audit committee
The audit committee is the appropriate group as it is a representative of governance. Governance communication is established in AU section 380.
Example Question #12 : Performing Further Procedures
“Significant Difficulties” encountered through an audit that should be communicated to governance include:
Restrictions imposed on the auditor
All of the answer choices are correct.
The unavailability of expected information
Significant delays in management providing information
All of the answer choices are correct.
AU Section 380 identifies specific instances of communication. The instances included for communication to the government are significant delays, unavailability of information, and restrictions placed on auditors.
Example Question #1 : Communication With Management
According to AU 380, the auditor must communicate to those charged with governance all items related to the audit except those that:
Neither A and B
Both A and B
The auditor's judgment deems them immaterial
Are restricted by law
Both A and B
Auditors must communicate all items to governance except those that the auditors in their professional judgment deem immaterial. Auditors may also be restricted by law in their communication with governance.
Example Question #13 : Performing Further Procedures
An auditor's communication with those charged with governance is required to include the:
Justification for the auditor's selection of sampling methods
Discussion of disagreements with management about matters that significantly impact the financial statements
Basis for the auditor's preliminary judgement about materiality
Assessment of the quality of the entity's earnings as compared to the previous year
Discussion of disagreements with management about matters that significantly impact the financial statements
The auditor should discuss with those charged with governance any significant disagreements with management, whether or not satisfactorily resolved, about matters that are significant to the financial statements or to the auditor's report.
Example Question #2 : Communication With Management
An auditor's communication of internal control related matters noted in an audit usually should be addressed to:
The chief accounting officer
Management and those charged with governance
The director of internal auditing
The chief financial officer
Management and those charged with governance
An auditor's communication of internal control related matters noted in an audit usually should be addressed to management and those charged with governance.
Example Question #3 : Communication With Management
An auditor should communicate a deficiency to a non-issuer client's management only either orally or in writing when there is a:
None of the answer choices are correct
Control deficiency
Material weakness
Significant deficiency
Control deficiency
Communication of deficiencies in internal control varies on reporting to management. Significant deficiencies and material weaknesses for example need to be communicated in writing.
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