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

Why should a CPA consult with the continuing CPA when preparing a report on a specific transaction?

1. To ensure compliance with GAAP.

2. To avoid issuing an unmodified report.

3. To gather all relevant information for accurate reporting.

4. To enhance the CPA's credibility.

The correct answer is: To gather all relevant information for accurate reporting.

Consulting with the continuing CPA when preparing a report on a specific transaction is crucial for gathering all relevant information for accurate reporting. This interaction allows the CPA to leverage the ongoing relationship that the continuing CPA has with the client, which often provides insights into the nuances of the client's transactions, operations, and internal controls. Capturing detailed and relevant information helps in forming a comprehensive understanding of the context under which the transaction occurred, leading to a more accurate and reliable report. This proactive approach in communication significantly reduces the risk of overlooking vital details that could affect the evaluation of the transaction. By ensuring that all relevant facts and circumstances are disclosed, the CPA better fulfills their responsibility to provide a fair and accurate representation of the financial statements. Moreover, this collaboration helps align the reporting process with applicable accounting standards and industry practices, promoting transparency and compliance, which are key in the auditing profession. Accurate reporting ultimately supports the integrity of the financial information presented to stakeholders.