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CFA Level I · CFA Level I Exam · Introduction to Financial Statement Analysis

In an audit report, critical audit matters (key audit matters) are most likely:

Key or critical audit matters are the items the auditor judged most significant in auditing the current period's financial statements. They highlight areas of risk and judgment, and their presence does not mean a misstatement was found or that the opinion has been modified.

  1. Aitems the auditor judged to be of most significance in the audit of the current period's statements.Correct
  2. Bitems that the auditor concluded were material misstatements requiring a qualified opinion.
  3. Cweaknesses in internal control that management refused to remediate during the year.

Explanation

Key audit matters are those the auditor judged most significant in the audit, communicated to give users insight into areas of risk and judgment. Their inclusion does not by itself indicate a misstatement or a modified opinion, so the other choices wrongly equate them with errors or control failures.

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