AICPA Exam CPA-Auditing Topic 1 Question 93 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 93
Topic #: 1

Which of the following statements is correct concerning significant deficiencies noted in an audit of a nonissuer?

ASignificant deficiencies are material weaknesses in the design or operation of specific internal control components.

BThe auditor is obligated to search for significant deficiencies that could adversely affect the entity's ability to record and report financial data.

CSignificant deficiencies should not be re-communicated each year if management has acknowledged its understanding of such deficiencies.

DThe auditor should separately identify those significant deficiencies that are considered to be material weaknesses.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. The auditor should separately identify those significant deficiencies that are considered to be material weaknesses.

Choice 'a' is incorrect. Not all significant deficiencies are material weaknesses.

Choice 'b' is incorrect. The auditor is not obligated to search for significant deficiencies. The auditor is obligated to communicate to the client any significant deficiencies identified while auditing the financial statements.

Choice 'c' is incorrect. The auditor is obligated to re-communicate significant deficiencies each year, even if management has acknowledged its understanding of such deficiencies.

by Ronald at Jul 18, 2024, 01:59 PM

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Joana

4 months ago

Haha, significant deficiencies? More like 'significantly hilarious' deficiencies, am I right? Anyway, I'd go with A.

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Marci

4 months ago

C seems wrong to me. Significant deficiencies should be communicated each year, even if management is aware of them.

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Oretha

3 months ago

D) The auditor should separately identify those significant deficiencies that are considered to be material weaknesses.

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Kallie

3 months ago

C) I agree, significant deficiencies should be communicated each year, regardless of management's awareness.

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Micheline

3 months ago

B) The auditor is obligated to search for significant deficiencies that could adversely affect the entity's ability to record and report financial data.

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Leslie

3 months ago

A) Significant deficiencies are material weaknesses in the design or operation of specific internal control components.

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Elmira

4 months ago

I'm going with D. The auditor should clearly distinguish between significant deficiencies and material weaknesses.

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Belen

4 months ago

I think B is the correct answer. The auditor has a responsibility to identify any significant deficiencies that could affect the entity's financial reporting.

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Willard

3 months ago

B) The auditor is obligated to search for significant deficiencies that could adversely affect the entity's ability to record and report financial data.

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