ExpertHard1 markMultiple Choice
CPA · Question 57 · Area IV: Reporting
In an audit of an issuer, which of the following is a 'Critical Audit Matter' (CAM) that must be communicated in the auditor's report?
In an audit of an issuer, which of the following is a 'Critical Audit Matter' (CAM) that must be communicated in the auditor's report?
Answer options:
A.
Any significant deficiency in internal control.
B.
A matter that was communicated to the audit committee, relates to accounts or disclosures that are material, and involved especially challenging, subjective, or complex auditor judgment.
C.
All disagreements with management, regardless of materiality.
D.
The auditor's assessment of fraud risk.
How to approach this question
CAM Definition: 1. Communicated to Audit Committee. 2. Material Account/Disclosure. 3. Complex/Subjective Judgment.
Full Answer
B.A matter that was communicated to the audit committee, relates to accounts or disclosures that are material, and involved especially challenging, subjective, or complex auditor judgment.✓ Correct
A matter that was communicated to the audit committee, relates to accounts or disclosures that are material, and involved especially challenging, subjective, or complex auditor judgment.
PCAOB AS 3101 defines CAMs as matters arising from the audit that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment.
Common mistakes
Confusing CAMs with Emphasis of Matter paragraphs.
Practice the full CPA AUD Practice Exam 4
78 questions · hints · full answers · grading
More questions from this exam
Q01A CPA firm is performing an audit of a nonissuer, TechInnovate Inc. The engagement partner's spou...HardQ02An auditor is performing an audit of an issuer, Global Corp, in accordance with PCAOB standards. ...HardQ03A CPA is performing an audit of a county government entity that receives federal financial assist...HardQ04During the audit of an employee benefit plan subject to ERISA, the auditor discovers that the pla...HardQ05An auditor is evaluating the 'integrity' principle of the AICPA Code of Professional Conduct. Whi...Medium