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

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In an audit of an issuer, when should critical audit matters be communicated?

Immediately follows the Basis for Opinion section.
Immediately precedes the Basis for Opinion section.
Immediately precedes the Opinion on the Financial Statements section.
Immediately follows the Opinion on the Financial Statements section.

The correct answer is: Immediately follows the Basis for Opinion section.

The communication of critical audit matters is intended to provide transparency regarding issues that were of most significance to the audit. According to the auditing standards, these matters should be discussed immediately following the Basis for Opinion section in the auditor's report. This positioning allows readers to understand the foundational aspect of the auditor's opinion, followed by the critical issues that were encountered during the audit process. By placing this information immediately after the Basis for Opinion, it enhances the flow of the report, ensuring that users of the financial statements can easily comprehend what led to the auditor's opinion while also recognizing the complexities involved in the audit. This structured approach aids stakeholders in interpreting the auditor’s findings and the significant risks that were addressed.