Question
What is the rationale for the PCAOB's requirement to include a discussion of critical audit matters in the audit report? Provide two examples of areas
What is the rationale for the PCAOB's requirement to include a discussion of critical audit matters in the audit report? Provide two examples of areas that might be considered critical audit matters in the audit of a public company in the hotel and lodging industry.
What is the rationale for the PCAOB's requirement to include a discussion of critical audit matters in the audit report?
A.
The PCAOB requirement to communicate critical audit matters is intended to allow the auditors to include any items that management determined to be pertinent in nature but considered outside the scope of the audit. This makes a financial statement user aware that items outside the scope of the audit have been considered.
B.
The PCAOB requirement to communicate critical audit matters is intended to allow the auditor to use language that intends to restrict or minimize the auditor's responsibility for the critical audit matters or the auditor's opinion on the financial statements.
C.
The PCAOB requirement to communicate critical audit matters is intended to serve as a basis of altering the opinion on the financial statements after an auditor matters identified in the audit that represent issues that involved especially challenging, subjective, or complex auditor judgment.
D.
The PCAOB requirement to communicate critical audit matters is intended to inform investors and other financial statement users about matters identified in the audit that represent issues that involved especially challenging, subjective, or complex auditor judgment and how the auditor addressed those matters.
Two examples of areas that might be considered critical audit matters in the audit of a public company in the hotel and lodging industry include the following: (Select the two examples that apply.)
A.
Dividends
B.
Payroll
C.
Expenses
D.
Accounts payable
E.
Revenue
F.
Leased property
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