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Which of the following statements is correct about an auditors required communication with management and those charged with governance?

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Which of the following statements is correct concerning an auditor's required communication with those charged with governance? 

A. This communication is required to occur before the auditor's report on the financial statements is issued.
B. This communication should include management changes in the application of significant accounting policies.
C. Any significant matter communicated to those charged with governance also should be communicated to management.
D. Significant audit adjustments proposed by the auditor and recorded by management need not be communicated to those charged with governance.

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Answer: This communication should include management changes in the application of significant accounting policies.

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201059

Which of the following describes how the objective of a review of financial statements differs from the objective of a compilation engagement?

In a review engagement, accountants provide limited assurance, but a compilation expresses no assurance.
The primary objective of a review engagement is to test the completeness of the financial statements prepared, but a compilation tests for reasonableness.
The primary objective of a review engagement is to provide positive assurance that the financial statements are fairly presented, but a compilation provides no such assurance.
In a review engagement, accountants provide reasonable or positive assurance that the financial statements are fairly presented, but a compilation provides limited assurance.

Which of the following statements is correct concerning an auditor’s required communication with those charged with governance?
A. This communication is required to occur before the auditor’s report on the financial statements is issued.
B. This communication should include management changes in the application of significant accounting policies.
C. Any significant matter communicated to those charged with governance also should be communicated to management.
D. Significant audit adjustments proposed by the auditor and recorded by management need not be communicated to those charged with governance.

Last Updated on January 30, 2022 by Admin 3

  • AUD CPA : All Parts

  • This communication is required to occur before the auditor’s report on the financial statements is issued.
  • This communication should include management changes in the application of significant accounting policies. 
  • Any significant matter communicated to those charged with governance also should be communicated to management.
  • Significant audit adjustments proposed by the auditor and recorded by management need not be communicated to those charged with governance.

Explanation: 
Choice “B” is correct. The auditor should determine that those charged with governance are informed about the initial selection of and changes in significant accounting policies or their application.
Choice “A” is incorrect. The communication is incidental to the audit; accordingly, it is not required to occur before the issuance of the auditor’s report as long as the communication occurs on a timely basis. (Note, however, that for audits of issuers, the communication must be made before the auditor’s report is filed with the SEC.)
Choice “C” is incorrect. Communication with management is not required.
Choice “D” is incorrect. Unless all those charged with governance are also involved with managing the entity, the auditor should inform those charged with governance about adjustments that could, either individually or in the aggregate, have a significant effect on the entity’s financial reporting process, regardless of whether the adjustment was recorded.

  • AUD CPA : All Parts

Which of the following items are auditors required to communicate to those charged with governance?

05 The auditor must communicate with those charged with governance matters related to the financial statement audit that are, in the auditor's profes- sional judgment, significant and relevant to the responsibilities of those charged with governance in overseeing the financial reporting process. .

Which of the following matters is an auditor required to communicate to those charged with governance quizlet?

Which of the following matters is an auditor required to communicate to those in the entity charged with governance? Discussion of disagreements with management about matters that significantly affect the entity's financial statements.

Which of the following statements is correct concerning an auditor's required communication with the audit committee?

Which of the following statements is correct concerning an auditor's required communication with an entity's audit committee? This communication should include disagreements with management about significant audit adjustments, whether satisfactorily resolved or unresolved.

Why do auditors need to communicate with those charged with governance?

The reason for communicating such matters is to ensure that the auditors have brought them to the attention of the people responsible for the accounting and financial reporting function of the entity. Those responsible can then discuss the matters and decide any actions that need to be taken in respect of them.

statements correct auditors required communication management charged governance

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