ExpertHard1 markMultiple Choice
CPA · Question 65 · Area IV: Forming Conclusions and Reporting
An auditor is performing a 'review' of the Management's Discussion and Analysis (MD&A) of a nonissuer. Which of the following is a requirement for this engagement?
An auditor is performing a 'review' of the Management's Discussion and Analysis (MD&A) of a nonissuer. Which of the following is a requirement for this engagement?
Answer options:
A.
The auditor must have audited the financial statements for the latest period to which the MD&A relates.
B.
The auditor provides an opinion on the MD&A.
C.
The engagement is performed under SSARS.
D.
The auditor need not be independent.
How to approach this question
MD&A Engagement = SSAE. Prerequisite: You must be the auditor of the financials. You can't review MD&A in a vacuum.
Full Answer
A.The auditor must have audited the financial statements for the latest period to which the MD&A relates.✓ Correct
The auditor must have audited the financial statements for the latest period to which the MD&A relates.
Under SSAE (AT-C), a practitioner may perform an examination or review of MD&A only if they have audited the financial statements for the most recent period to which the MD&A relates.
Common mistakes
Thinking MD&A is SSARS; forgetting the audit prerequisite.
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