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

What procedure should a CPA firm perform when relying on another firm's audit work?

1. Reference reliance in a footnote.

2. Review the other firm's audit workpapers.

3. Obtain the other firm's representation letter.

4. Report reliance in the opinion paragraph of the report.

The correct answer is: Review the other firm's audit workpapers.

When a CPA firm relies on the audit work of another firm, it is essential for the relying firm to perform procedures that ensure the quality and appropriateness of the other firm's audit. Reviewing the other firm's audit workpapers is a critical step in this process, as it allows the relying firm to evaluate the adequacy of the procedures performed and the conclusions reached by the other firm. This review helps to confirm that the audit was conducted in accordance with the relevant auditing standards and provides assurance that the findings are reliable. In the context of auditing, understanding and assessing the work performed by another firm is vital for maintaining the integrity of the overall audit process. By thoroughly reviewing the workpapers, the CPA firm can identify any potential issues, discrepancies, or areas of concern that could impact their opinion on the financial statements. This step is crucial, especially when the other audit may have been conducted in a different context or jurisdiction where auditing practices may vary. In contrast, simply referencing reliance in a footnote, obtaining a representation letter, or reporting reliance in the opinion paragraph does not provide the same level of scrutiny and assurance about the quality of the other firm’s work. These options may be part of the broader documentation or communication process but do not substitute the necessity of a detailed