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NEW QUESTION: 1
NEW QUESTION: 2
An auditor would least likely initiate a discussion with those charged with governance concerning:
A. Disagreements with management as to accounting principles that were resolved during the current
B. The methods used to account for significant unusual transactions.
C. The maximum dollar amount of misstatements that could exist without causing the financial statements
to be materially misstated.
D. Indications of fraud and illegal acts committed by a corporate officer that were discovered by the
Choice "B" is correct. The auditor's consideration of materiality is a matter of professional judgment and is
influenced by the auditor's perception of the needs of a reasonable person who will rely on the financial
statements. Materiality assessments are not typically discussed with those charged with governance.
Choice "A" is incorrect. The auditor should communicate with those charged with governance about the
appropriateness of significant accounting policies, such as the methods used to account for significant
Choice "C" is incorrect. The auditor should inform those charged with governance of illegal acts that come
to the auditor's attention during the course of the audit. Fraud involving senior management should also be
reported directly to those charged with governance.
Choice "D" is incorrect. The auditor should discuss with those charged with governance any
disagreements with management, whether or not they were satisfactorily resolved, about matters that
individually or in the aggregate could be significant to the entity's financial statements or the auditor's