Audit CPA Actual Exam Study Questions
with 100% Correct Answers | Brand New
Version
1. Which standards provide the most authoritative U.S auditing guidance for
non-issuers and issuers, and who issues those standards? - ANSWER – Non
issuers
SASs, AICPA (Statement on Auditing Standards issued by he
Auditing Standards Board)
- Issuers
Ass, PCAOB (Auditing Standards issued by the Public Company
Accounting Oversight Board)
2. Primary purpose of an Audit - ANSWER To provide financial statement
users with an opinion on whether the financial statements are fairly
presented, in all material respects, in accordance with the applicable
financial reporting framework
3. What should be included in the auditor's responsibility paragraph of the
unmodified audit opinion (non-issuer) - ANSWER "REPPORTS CRAME"
A statement that it is the auditor's responsibility to express an opinion on the
financial statements based on the audit
A statement that the audit was conducted in accordance with auditing standards
generally accepted in the US
A statement that standards require that the auditor plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement
A description of the audit
,A statement whether the auditor believes the audit evidence obtained is
sufficient and appropriate to provide a basis for the auditor's opinion
4. What should be included in the opinion paragraph of the unmodified audit
opinion (nonissuer) - ANSWER 1. A statement that the financial statements
present fairly in all material respects, the financial position of the entity as of
the balance sheet date and the results of operations and its cash flows for the
period then ended, in accordance with the applicable financial framework
2. Identification of the applicable financial reporting framework and its origins
5. Where in the standard unmodified opinion (nonissuer) does the auditor refer
to (1) the applicable financial reporting framework and (2) GAAS? -
ANSWER 1. The applicable financial reporting framework is referred to in
the management's responsibility paragraph and opinion paragraph
2. GAAS is referred to in the auditor's responsibility paragraph
6. List in order the primary sections of an unqualified audit opinion (issuer) -
ANSWER Title
Addressee
Opinion section
Basis for Opinion section
Signature, tenure, location
Report date
7. What should be included in the opinion section of the unqualified audit
opinion (issuer) - ANSWER The first section of the auditor's report must
include the section titled "Opinion on the Financial Statements" and the
following elements:
The name of the company whose financial statements have been audited
,A statement identifying each financial statement and any related schedule that
has been audited
Dates or periods covered by each financial statement and related schedule
A statement indicating that the financial statements were audited
An opinion that the financial statements present fairly in, all material respects,
the financial position of the company as of the balance sheet date and the results
of its operations and its cash flows for the period then ended in conformity with
the applicable financial reporting framework (GAAP)
8. What are the five general GAAS requirements related to the conduct of an
audit - ANSWER (SEJEC)
1.Professional Skepticism
2.Ethical Requirements
3.Professional Judgement
4.Sufficient and Appropriate Audit Evidence
5.Compliance with GAAS
9. Identify three inherent limitations of an audit - ANSWER 1. The nature of
financial reporting
2. The nature audit procedures
3. Timeliness of financial reporting and the balance between benefit and cost
10.When should an auditor's opinion be modified? - ANSWER -The auditor
determines that the financial statements as a whole are materially misstated
(GAAP issue); or
-The auditor is unable to obtain sufficient appropriate audit evidence to
conclude that the financial statements as a whole are free from material
misstatement (GAAS issue)
, 11.List in order the primary sections of an unmodified audit opinion (non-
issuer) - ANSWER Title: Independent Auditor's report
Addressee: Based on the circumstances of the engagement
Introduction: We have audited the accompanying financial statements of...
Management's Responsibility for the Financial Statements: Management is
responsible for the preparation and fair presentation of the financial statement...
Auditor's Responsibility: Our responsibility is to express an opinion on these
financial statements based on our audit
Opinion: In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position...
Report on Other Legal and Regulatory requirements: If applicable.
12.What should be included in the introductory paragraph of the unmodified
audit opinion (non-issuer) - ANSWER 1. The entity whose financial
statements have been audited
2.A statement that the financial statements were audited
3. The title of each financial statement audited
4. Dates or periods covered by each financial statement
13.What should be included in management's responsibility paragraph of the
unmodified opinion (non-issuer) - ANSWER "MR.DIM"
An explanation that management is responsible for the preparation and fair
presentation of the financial statements in accordance with the applicable
financial reporting framework
A statement that this responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error
with 100% Correct Answers | Brand New
Version
1. Which standards provide the most authoritative U.S auditing guidance for
non-issuers and issuers, and who issues those standards? - ANSWER – Non
issuers
SASs, AICPA (Statement on Auditing Standards issued by he
Auditing Standards Board)
- Issuers
Ass, PCAOB (Auditing Standards issued by the Public Company
Accounting Oversight Board)
2. Primary purpose of an Audit - ANSWER To provide financial statement
users with an opinion on whether the financial statements are fairly
presented, in all material respects, in accordance with the applicable
financial reporting framework
3. What should be included in the auditor's responsibility paragraph of the
unmodified audit opinion (non-issuer) - ANSWER "REPPORTS CRAME"
A statement that it is the auditor's responsibility to express an opinion on the
financial statements based on the audit
A statement that the audit was conducted in accordance with auditing standards
generally accepted in the US
A statement that standards require that the auditor plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement
A description of the audit
,A statement whether the auditor believes the audit evidence obtained is
sufficient and appropriate to provide a basis for the auditor's opinion
4. What should be included in the opinion paragraph of the unmodified audit
opinion (nonissuer) - ANSWER 1. A statement that the financial statements
present fairly in all material respects, the financial position of the entity as of
the balance sheet date and the results of operations and its cash flows for the
period then ended, in accordance with the applicable financial framework
2. Identification of the applicable financial reporting framework and its origins
5. Where in the standard unmodified opinion (nonissuer) does the auditor refer
to (1) the applicable financial reporting framework and (2) GAAS? -
ANSWER 1. The applicable financial reporting framework is referred to in
the management's responsibility paragraph and opinion paragraph
2. GAAS is referred to in the auditor's responsibility paragraph
6. List in order the primary sections of an unqualified audit opinion (issuer) -
ANSWER Title
Addressee
Opinion section
Basis for Opinion section
Signature, tenure, location
Report date
7. What should be included in the opinion section of the unqualified audit
opinion (issuer) - ANSWER The first section of the auditor's report must
include the section titled "Opinion on the Financial Statements" and the
following elements:
The name of the company whose financial statements have been audited
,A statement identifying each financial statement and any related schedule that
has been audited
Dates or periods covered by each financial statement and related schedule
A statement indicating that the financial statements were audited
An opinion that the financial statements present fairly in, all material respects,
the financial position of the company as of the balance sheet date and the results
of its operations and its cash flows for the period then ended in conformity with
the applicable financial reporting framework (GAAP)
8. What are the five general GAAS requirements related to the conduct of an
audit - ANSWER (SEJEC)
1.Professional Skepticism
2.Ethical Requirements
3.Professional Judgement
4.Sufficient and Appropriate Audit Evidence
5.Compliance with GAAS
9. Identify three inherent limitations of an audit - ANSWER 1. The nature of
financial reporting
2. The nature audit procedures
3. Timeliness of financial reporting and the balance between benefit and cost
10.When should an auditor's opinion be modified? - ANSWER -The auditor
determines that the financial statements as a whole are materially misstated
(GAAP issue); or
-The auditor is unable to obtain sufficient appropriate audit evidence to
conclude that the financial statements as a whole are free from material
misstatement (GAAS issue)
, 11.List in order the primary sections of an unmodified audit opinion (non-
issuer) - ANSWER Title: Independent Auditor's report
Addressee: Based on the circumstances of the engagement
Introduction: We have audited the accompanying financial statements of...
Management's Responsibility for the Financial Statements: Management is
responsible for the preparation and fair presentation of the financial statement...
Auditor's Responsibility: Our responsibility is to express an opinion on these
financial statements based on our audit
Opinion: In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position...
Report on Other Legal and Regulatory requirements: If applicable.
12.What should be included in the introductory paragraph of the unmodified
audit opinion (non-issuer) - ANSWER 1. The entity whose financial
statements have been audited
2.A statement that the financial statements were audited
3. The title of each financial statement audited
4. Dates or periods covered by each financial statement
13.What should be included in management's responsibility paragraph of the
unmodified opinion (non-issuer) - ANSWER "MR.DIM"
An explanation that management is responsible for the preparation and fair
presentation of the financial statements in accordance with the applicable
financial reporting framework
A statement that this responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error
