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

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Prepare for the CPA Auditing and Attestation Exam. Leverage comprehensive materials, flashcards, and detailed explanations for each question. Master essential auditing concepts and techniques with confidence!

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What is required of Grene, CPA, when preparing a report on a specific transaction audited by another CPA?

Refuse the engagement due to a lack of information.
Produce an independent opinion without consultation.
Consult with the other CPA for relevant facts.
Decline the engagement for ethical reasons.

The correct answer is: Consult with the other CPA for relevant facts.

When preparing a report on a specific transaction audited by another CPA, it is essential for Grene, CPA, to consult with the other CPA for relevant facts. This action ensures that Grene has a comprehensive understanding of the transaction and the audit performed. Consulting with the other CPA allows Grene to gather necessary insights about the methods and assumptions used in the original audit, which contributes to the accuracy and reliability of Grene's report. This approach aligns with the principles of professional ethics and collaboration within the auditing profession, enabling CPAs to maintain the quality and integrity of their work. By doing so, Grene can also mitigate the risk of misstatements or misrepresentations in their report, leading to more informed conclusions based on a complete context of the transaction in question. This collaborative effort is crucial for upholding the standards of the CPA profession and ensuring that financial statements and reports provide a fair representation of the economic activities involved.