CPA AUD Exam: Auditing and Attestation
Core Section Practice Questions (2026
Edition)actual!!!
According to the AICPA Code of Professional Conduct, which of the following situations impairs
a CPA’s independence?
A) The CPA owns 10 shares of an audit client’s stock through a blind trust. (Rationale: Incorrect.
A blind trust where the CPA has no knowledge or control over the investments does not impair
independence, provided it meets specific criteria).
B) The CPA’s spouse is the controller of the audit client. (Rationale: Correct. A spouse is a close
relative, and holding a key management position like controller impairs independence).
C) The CPA is a member of a local business association that includes the audit client. (Rationale:
Incorrect. Membership in a business association does not constitute a financial interest that
impairs independence).
D) The CPA provides bookkeeping services to an audit client that is not a public interest entity.
(Rationale: Incorrect. For non-public entities, providing bookkeeping services does not impair
independence as long as management assumes all management responsibilities).
Correct ANSWER: B
Under the AICPA’s System of Quality Management (SQMS) effective in 2026, what is the
primary objective of the firm’s quality management system?
A) To guarantee that all audit opinions will be unmodified. (Rationale: Incorrect. SQMS provides
reasonable assurance, not a guarantee, regarding the quality of engagements).
B) To provide the firm with reasonable assurance that it meets its objectives related to
engagement quality. (Rationale: Correct. SQMS aims to provide reasonable assurance that the
firm and its personnel fulfill responsibilities and issue appropriate reports).
C) To ensure that the firm’s fees are competitive in the 2026 market. (Rationale: Incorrect.
SQMS focuses on quality and compliance, not pricing or market competitiveness).
D) To eliminate all risks associated with accepting new audit clients. (Rationale: Incorrect. SQMS
manages risks to an acceptably low level but cannot eliminate all risks entirely).
,Correct ANSWER: B
In a 2026 audit of a non-public entity, the auditor decides to use an AI-driven data analytics tool
to identify anomalous journal entries. What is the auditor’s primary responsibility regarding this
tool?
A) To rely solely on the AI tool’s output without further testing. (Rationale: Incorrect. Auditors
cannot blindly rely on AI; they must understand and test the tool’s logic and controls).
B) To obtain an understanding of the logic, assumptions, and controls over the AI tool to
evaluate the reliability of its output. (Rationale: Correct. When using automated tools, the
auditor must understand how the tool works and assess the reliability of the information it
produces).
C) To ensure the AI tool was developed by a Big Four accounting firm. (Rationale: Incorrect. The
developer’s identity does not determine the tool’s reliability; the auditor must evaluate the tool
itself).
D) To replace all substantive testing with the AI tool’s results. (Rationale: Incorrect. AI tools
assist in audit procedures but do not replace the need for professional judgment and other
substantive tests).
Correct ANSWER: B
Which of the following best describes the auditor’s responsibility regarding subsequent events
in a 2026 audit?
A) The auditor is responsible for detecting all subsequent events up to the date the financial
statements are issued. (Rationale: Incorrect. The auditor’s responsibility for subsequent events
ends at the date of the auditor’s report, not the issuance date).
B) The auditor has no responsibility for subsequent events after the fieldwork is complete.
(Rationale: Incorrect. The auditor must perform procedures up to the date of the auditor’s
report).
C) The auditor must perform procedures to identify subsequent events occurring up to the date
of the auditor’s report. (Rationale: Correct. The auditor’s active duty to identify subsequent
events extends to the date the audit report is dated).
D) The auditor only needs to consider subsequent events if management brings them to the
auditor’s attention. (Rationale: Incorrect. The auditor must actively perform procedures, not
just wait for management to disclose them).
Correct ANSWER: C
When assessing the risk of material misstatement due to fraud in a 2026 audit, which of the
following is considered a fraud risk factor related to opportunities?
,A) Management’s compensation is tied to aggressive revenue targets. (Rationale: Incorrect. This
is a motivation/pressure factor, not an opportunity).
B) The entity’s assets are highly liquid, such as cash or marketable securities. (Rationale:
Correct. Highly liquid assets provide the opportunity to misappropriate assets).
C) Management has a history of dominating the board of directors. (Rationale: Incorrect. This is
a rationalization/attitude factor, indicating a culture that might excuse fraud).
D) The industry is experiencing a significant decline in consumer demand. (Rationale: Incorrect.
Industry decline creates pressure/motivation to commit fraud to meet expectations).
Correct ANSWER: B
Which of the following engagements requires the highest level of assurance?
A) A review of historical financial statements. (Rationale: Incorrect. A review provides limited
assurance, which is lower than reasonable assurance).
B) An audit of historical financial statements. (Rationale: Correct. An audit provides reasonable
(high) assurance, the highest level among standard attest services).
C) An examination of prospective financial information. (Rationale: Incorrect. While it provides
reasonable assurance, an audit of historical statements is the standard benchmark for highest
assurance in the core section).
D) A compilation of financial statements. (Rationale: Incorrect. A compilation provides no
assurance).
Correct ANSWER: B
In the context of a 2026 group audit, what is the responsibility of the group engagement team
regarding the work of a component auditor?
A) The group engagement team must assume full responsibility and not reference the
component auditor. (Rationale: Incorrect. The group team can reference the component
auditor if they choose, though many prefer not to).
B) The group engagement team is responsible for the direction, supervision, and performance
of the group audit, including evaluating the component auditor’s work. (Rationale: Correct. The
group team must oversee the component auditor and determine the extent to which their work
will be used).
C) The component auditor is solely responsible for the audit opinion on the group financial
statements. (Rationale: Incorrect. The group engagement partner and team hold the ultimate
responsibility for the group audit opinion).
, D) The group team only needs to review the component auditor’s final report. (Rationale:
Incorrect. The group team must be involved in planning, assess risks, and evaluate the
component auditor’s work throughout the engagement).
Correct ANSWER: B
Which of the following circumstances requires a CPA to withdraw from an audit engagement
under the AICPA Code of Professional Conduct?
A) The client requests the CPA to use a different accounting framework. (Rationale: Incorrect.
Using a different acceptable framework does not require withdrawal).
B) The client imposes a scope limitation that is so significant the auditor cannot express an
opinion, and the client refuses to remove it. (Rationale: Correct. If a scope limitation prevents
the auditor from obtaining sufficient evidence and leads to a disclaimer, withdrawal may be
necessary if the client insists on an unmodified report).
C) The auditor discovers a minor error in the prior year’s financial statements. (Rationale:
Incorrect. Minor errors are corrected in the current year and do not require withdrawal).
D) The client changes its CFO during the audit. (Rationale: Incorrect. A change in management
does not require withdrawal unless it involves fraud or illegal acts that management refuses to
address).
Correct ANSWER: B
What is the primary purpose of an engagement quality review (EQR) under 2026 quality
management standards?
A) To provide a second opinion on the client’s financial statements. (Rationale: Incorrect. The
EQR evaluates the engagement team’s judgments, not the client’s statements directly).
B) To provide an objective evaluation of the significant judgments made by the engagement
team and the conclusions reached. (Rationale: Correct. The EQR partner reviews the work to
ensure significant judgments and conclusions are appropriate before the report is issued).
C) To ensure the engagement was completed within the budgeted time. (Rationale: Incorrect.
EQR focuses on quality and compliance, not budget or efficiency).
D) To replace the need for the engagement partner’s review. (Rationale: Incorrect. The EQR is
an additional layer of review; it does not replace the engagement partner’s responsibilities).
Correct ANSWER: B
Under the AICPA’s standards for auditing through the use of service organizations in 2026, what
does a SOC 2 report primarily address?
Core Section Practice Questions (2026
Edition)actual!!!
According to the AICPA Code of Professional Conduct, which of the following situations impairs
a CPA’s independence?
A) The CPA owns 10 shares of an audit client’s stock through a blind trust. (Rationale: Incorrect.
A blind trust where the CPA has no knowledge or control over the investments does not impair
independence, provided it meets specific criteria).
B) The CPA’s spouse is the controller of the audit client. (Rationale: Correct. A spouse is a close
relative, and holding a key management position like controller impairs independence).
C) The CPA is a member of a local business association that includes the audit client. (Rationale:
Incorrect. Membership in a business association does not constitute a financial interest that
impairs independence).
D) The CPA provides bookkeeping services to an audit client that is not a public interest entity.
(Rationale: Incorrect. For non-public entities, providing bookkeeping services does not impair
independence as long as management assumes all management responsibilities).
Correct ANSWER: B
Under the AICPA’s System of Quality Management (SQMS) effective in 2026, what is the
primary objective of the firm’s quality management system?
A) To guarantee that all audit opinions will be unmodified. (Rationale: Incorrect. SQMS provides
reasonable assurance, not a guarantee, regarding the quality of engagements).
B) To provide the firm with reasonable assurance that it meets its objectives related to
engagement quality. (Rationale: Correct. SQMS aims to provide reasonable assurance that the
firm and its personnel fulfill responsibilities and issue appropriate reports).
C) To ensure that the firm’s fees are competitive in the 2026 market. (Rationale: Incorrect.
SQMS focuses on quality and compliance, not pricing or market competitiveness).
D) To eliminate all risks associated with accepting new audit clients. (Rationale: Incorrect. SQMS
manages risks to an acceptably low level but cannot eliminate all risks entirely).
,Correct ANSWER: B
In a 2026 audit of a non-public entity, the auditor decides to use an AI-driven data analytics tool
to identify anomalous journal entries. What is the auditor’s primary responsibility regarding this
tool?
A) To rely solely on the AI tool’s output without further testing. (Rationale: Incorrect. Auditors
cannot blindly rely on AI; they must understand and test the tool’s logic and controls).
B) To obtain an understanding of the logic, assumptions, and controls over the AI tool to
evaluate the reliability of its output. (Rationale: Correct. When using automated tools, the
auditor must understand how the tool works and assess the reliability of the information it
produces).
C) To ensure the AI tool was developed by a Big Four accounting firm. (Rationale: Incorrect. The
developer’s identity does not determine the tool’s reliability; the auditor must evaluate the tool
itself).
D) To replace all substantive testing with the AI tool’s results. (Rationale: Incorrect. AI tools
assist in audit procedures but do not replace the need for professional judgment and other
substantive tests).
Correct ANSWER: B
Which of the following best describes the auditor’s responsibility regarding subsequent events
in a 2026 audit?
A) The auditor is responsible for detecting all subsequent events up to the date the financial
statements are issued. (Rationale: Incorrect. The auditor’s responsibility for subsequent events
ends at the date of the auditor’s report, not the issuance date).
B) The auditor has no responsibility for subsequent events after the fieldwork is complete.
(Rationale: Incorrect. The auditor must perform procedures up to the date of the auditor’s
report).
C) The auditor must perform procedures to identify subsequent events occurring up to the date
of the auditor’s report. (Rationale: Correct. The auditor’s active duty to identify subsequent
events extends to the date the audit report is dated).
D) The auditor only needs to consider subsequent events if management brings them to the
auditor’s attention. (Rationale: Incorrect. The auditor must actively perform procedures, not
just wait for management to disclose them).
Correct ANSWER: C
When assessing the risk of material misstatement due to fraud in a 2026 audit, which of the
following is considered a fraud risk factor related to opportunities?
,A) Management’s compensation is tied to aggressive revenue targets. (Rationale: Incorrect. This
is a motivation/pressure factor, not an opportunity).
B) The entity’s assets are highly liquid, such as cash or marketable securities. (Rationale:
Correct. Highly liquid assets provide the opportunity to misappropriate assets).
C) Management has a history of dominating the board of directors. (Rationale: Incorrect. This is
a rationalization/attitude factor, indicating a culture that might excuse fraud).
D) The industry is experiencing a significant decline in consumer demand. (Rationale: Incorrect.
Industry decline creates pressure/motivation to commit fraud to meet expectations).
Correct ANSWER: B
Which of the following engagements requires the highest level of assurance?
A) A review of historical financial statements. (Rationale: Incorrect. A review provides limited
assurance, which is lower than reasonable assurance).
B) An audit of historical financial statements. (Rationale: Correct. An audit provides reasonable
(high) assurance, the highest level among standard attest services).
C) An examination of prospective financial information. (Rationale: Incorrect. While it provides
reasonable assurance, an audit of historical statements is the standard benchmark for highest
assurance in the core section).
D) A compilation of financial statements. (Rationale: Incorrect. A compilation provides no
assurance).
Correct ANSWER: B
In the context of a 2026 group audit, what is the responsibility of the group engagement team
regarding the work of a component auditor?
A) The group engagement team must assume full responsibility and not reference the
component auditor. (Rationale: Incorrect. The group team can reference the component
auditor if they choose, though many prefer not to).
B) The group engagement team is responsible for the direction, supervision, and performance
of the group audit, including evaluating the component auditor’s work. (Rationale: Correct. The
group team must oversee the component auditor and determine the extent to which their work
will be used).
C) The component auditor is solely responsible for the audit opinion on the group financial
statements. (Rationale: Incorrect. The group engagement partner and team hold the ultimate
responsibility for the group audit opinion).
, D) The group team only needs to review the component auditor’s final report. (Rationale:
Incorrect. The group team must be involved in planning, assess risks, and evaluate the
component auditor’s work throughout the engagement).
Correct ANSWER: B
Which of the following circumstances requires a CPA to withdraw from an audit engagement
under the AICPA Code of Professional Conduct?
A) The client requests the CPA to use a different accounting framework. (Rationale: Incorrect.
Using a different acceptable framework does not require withdrawal).
B) The client imposes a scope limitation that is so significant the auditor cannot express an
opinion, and the client refuses to remove it. (Rationale: Correct. If a scope limitation prevents
the auditor from obtaining sufficient evidence and leads to a disclaimer, withdrawal may be
necessary if the client insists on an unmodified report).
C) The auditor discovers a minor error in the prior year’s financial statements. (Rationale:
Incorrect. Minor errors are corrected in the current year and do not require withdrawal).
D) The client changes its CFO during the audit. (Rationale: Incorrect. A change in management
does not require withdrawal unless it involves fraud or illegal acts that management refuses to
address).
Correct ANSWER: B
What is the primary purpose of an engagement quality review (EQR) under 2026 quality
management standards?
A) To provide a second opinion on the client’s financial statements. (Rationale: Incorrect. The
EQR evaluates the engagement team’s judgments, not the client’s statements directly).
B) To provide an objective evaluation of the significant judgments made by the engagement
team and the conclusions reached. (Rationale: Correct. The EQR partner reviews the work to
ensure significant judgments and conclusions are appropriate before the report is issued).
C) To ensure the engagement was completed within the budgeted time. (Rationale: Incorrect.
EQR focuses on quality and compliance, not budget or efficiency).
D) To replace the need for the engagement partner’s review. (Rationale: Incorrect. The EQR is
an additional layer of review; it does not replace the engagement partner’s responsibilities).
Correct ANSWER: B
Under the AICPA’s standards for auditing through the use of service organizations in 2026, what
does a SOC 2 report primarily address?
