Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

If an auditor expresses an unmodified opinion on financial statements but has not been engaged to examine additional management information, what is the auditor's responsibility?

1. A. Request the management report placement to avoid misinterpretation

2. B. No obligation to read the management report

3. C. Read the management report for material misstatements

4. D. Add an other-matter paragraph disclaiming an opinion

The correct answer is: C. Read the management report for material misstatements

An auditor's responsibility when they have expressed an unmodified opinion on financial statements, yet have not been engaged to examine additional management information, includes the need to read the management report for material misstatements. This action is important because it helps ensure that the auditor is aware of any information provided by management that could potentially affect the understanding of the financial statements. When an auditor reads the management report, they are looking for any inconsistencies or inaccuracies that might mislead users of the financial statements. While the auditor is not required to audit this additional information, understanding its content can help them identify whether the information is materially misstated in the context of the audited financial statements. Furthermore, if the management report is found to have material misstatements, the auditor can take appropriate steps to communicate this issue. This responsibility aligns with the overall principles of transparency and due diligence required of auditors, reinforcing the importance of maintaining a high level of integrity and accuracy in financial reporting.