CPA EXAM PRACTICE (DETAILED
ANSWERS) 2024 - DISTINCTION
GUARANTEED
The Sarbanes-Oxley Act of 2002 imposes a mandatory rotation applicable to both the
audit engagement partner and the quality control (also called review) partner. How long
in total is the partner allowed to serve as the engagement partner or review partner
before someone else must serve in that capacity?
3 years.
5 years.
7 years.
10 years - ANS-5 Years
An entity engaged a CPA to determine whether the client's web sites meet defined
criteria for standard business practices and controls over transaction integrity and
information protection.
In performing this engagement, the CPA should comply with the provisions of
Statements on Assurance Standards.
Statements on Standards for Attestation Engagements.
Statements on Standards for Management Consulting Services.
Statements on Auditing Standards. - ANS-Statements on Standards for Attestation
Engagements
At least how often should the PCAOB inspect a registered public accounting firm that
regularly issues audit reports to 50 issuers?
Annually.
Every two years.
Every three years.
As requested by the firm. - ANS-Every 3 years
An attestation engagement is one in which a CPA is engaged to
Issue a written communication expressing a conclusion about the reliability of a written
assertion that is the responsibility of another party.
Provide tax advice or prepare a tax return based on financial information the CPA has
not audited or reviewed.
, Testify as an expert witness in accounting, auditing, or tax matters, given certain
stipulated facts.
Assemble pro forma financial statements based on the representations of the entity's
management without expressing any assurance. - ANS-Issue a written communication
expressing a conclusion about the reliability of a written assertion that is the
responsibility of another party
The Public Company Accounting Oversight Board (PCAOB) is charged with all of the
following responsibilities except:
Establishing accounting standards for public companies.
Establishing auditing standards.
Registering accounting firms that will audit public companies.
Inspecting accounting firms that will audit public companies. - ANS-Establishing
accounting standards for public companies
Under the Sarbanes-Oxley Act of 2002, which of the following is not a stated
responsibility of the Public Company Accounting Oversight Board?
Conducting inspections of registered public accounting firms.
Overseeing the registration of public accounting firms.
Issuing accounting standards that must be followed by issuers in financial reporting.
Issuing auditing standards that must be followed by registered public accounting firms in
auditing the financial statements of issuers. - ANS-Issuing accounting standards that
must be followed by issuers in financial reporting
Which of the following matters does an auditor usually include in the engagement letter?
- ANS-arrangements regarding fees and billing
- The engagement letter identifies the respective responsibilities of the entity and the
auditor, and essentially constitutes the contract between the parties. It is customary for
the engagement letter to address fee-related issues.
As a result of control testing, a CPA has decided to reduce control risk. What is the
impact on substantive testing sample size if all other factors remain constant? - ANS-the
sample size would be lower
- Lowering the assessment of control risk would permit a somewhat higher level of
detection risk. Taking a smaller sample size would be associated with a higher level of
detection risk, which would be appropriate in view of the reduced control risk.
The understanding with the client regarding a financial statement audit generally
includes which of the following matters? - ANS-the responsibilities of the auditor
- An engagement letter, which documents the agreed upon terms of the audit
engagement, specifically addresses the respective responsibilities of management and
the auditor, among other matters.
ANSWERS) 2024 - DISTINCTION
GUARANTEED
The Sarbanes-Oxley Act of 2002 imposes a mandatory rotation applicable to both the
audit engagement partner and the quality control (also called review) partner. How long
in total is the partner allowed to serve as the engagement partner or review partner
before someone else must serve in that capacity?
3 years.
5 years.
7 years.
10 years - ANS-5 Years
An entity engaged a CPA to determine whether the client's web sites meet defined
criteria for standard business practices and controls over transaction integrity and
information protection.
In performing this engagement, the CPA should comply with the provisions of
Statements on Assurance Standards.
Statements on Standards for Attestation Engagements.
Statements on Standards for Management Consulting Services.
Statements on Auditing Standards. - ANS-Statements on Standards for Attestation
Engagements
At least how often should the PCAOB inspect a registered public accounting firm that
regularly issues audit reports to 50 issuers?
Annually.
Every two years.
Every three years.
As requested by the firm. - ANS-Every 3 years
An attestation engagement is one in which a CPA is engaged to
Issue a written communication expressing a conclusion about the reliability of a written
assertion that is the responsibility of another party.
Provide tax advice or prepare a tax return based on financial information the CPA has
not audited or reviewed.
, Testify as an expert witness in accounting, auditing, or tax matters, given certain
stipulated facts.
Assemble pro forma financial statements based on the representations of the entity's
management without expressing any assurance. - ANS-Issue a written communication
expressing a conclusion about the reliability of a written assertion that is the
responsibility of another party
The Public Company Accounting Oversight Board (PCAOB) is charged with all of the
following responsibilities except:
Establishing accounting standards for public companies.
Establishing auditing standards.
Registering accounting firms that will audit public companies.
Inspecting accounting firms that will audit public companies. - ANS-Establishing
accounting standards for public companies
Under the Sarbanes-Oxley Act of 2002, which of the following is not a stated
responsibility of the Public Company Accounting Oversight Board?
Conducting inspections of registered public accounting firms.
Overseeing the registration of public accounting firms.
Issuing accounting standards that must be followed by issuers in financial reporting.
Issuing auditing standards that must be followed by registered public accounting firms in
auditing the financial statements of issuers. - ANS-Issuing accounting standards that
must be followed by issuers in financial reporting
Which of the following matters does an auditor usually include in the engagement letter?
- ANS-arrangements regarding fees and billing
- The engagement letter identifies the respective responsibilities of the entity and the
auditor, and essentially constitutes the contract between the parties. It is customary for
the engagement letter to address fee-related issues.
As a result of control testing, a CPA has decided to reduce control risk. What is the
impact on substantive testing sample size if all other factors remain constant? - ANS-the
sample size would be lower
- Lowering the assessment of control risk would permit a somewhat higher level of
detection risk. Taking a smaller sample size would be associated with a higher level of
detection risk, which would be appropriate in view of the reduced control risk.
The understanding with the client regarding a financial statement audit generally
includes which of the following matters? - ANS-the responsibilities of the auditor
- An engagement letter, which documents the agreed upon terms of the audit
engagement, specifically addresses the respective responsibilities of management and
the auditor, among other matters.
