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

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In a nonissuer audit, when should significant deficiencies be communicated to management?

  1. Orally by the report release date

  2. In writing, within 60 days of the report release

  3. In writing, by the report release date

  4. Orally, within 60 days of the report release

The correct answer is: In writing, within 60 days of the report release

In a nonissuer audit, significant deficiencies must be communicated to management in writing within 60 days of the report release date. This timing is crucial as it allows management to have a clear understanding of the deficiencies identified during the audit process while also providing them sufficient time to respond or take action based on the recommendations provided. The requirement for written communication serves to document the issues clearly and formally, which can be essential for follow-up purposes and ongoing organizational improvements. By providing this written communication within the established timeframe, auditors ensure that management is adequately informed and can prioritize addressing the deficiencies highlighted. This approach aligns with professional standards, emphasizing the importance of transparency and effective communication in the auditor-management relationship, particularly when it comes to matters of internal control that could impact financial reporting.