AUD CPA EXAM QUESTIONS & ANSWERS
Review engagement - answers -engagement in which the auditor does adequate work
to provide limited assurance that the statements are prepared in compliance with the
company's reporting framework.
Ssars should include: - answers -a title that includes the word independent to clearly
indicate that it is the report of an independent accountant for a review engagement.
An addressee, based on the circumstances of the engagement.
Identification of criteria and the responsible party for the subject matter.
An introductory paragraph that identifies the entity whose financial statements have
been reviewed.
A second paragraph stating that a review is less substantial than an audit and provides
only limited assurance.
A third paragraph stating that the accountant must remain independent and meet
relevant ethical requirements of the aicpa code of conduct.
A concluding section that includes a statement about whether the accountant is aware
(or not aware) of any material modifications that should be made to the accompanying
financial statements for them to be in accordance with the applicable financial reporting
framework.
The signature of the accountant's firm.
The city and state where the accountant practices.
The date of the review report.
Attribute - answers -any characteristic that is either present or absent. In tests of
controls, the presence or absence of evidence of the application of a specified control
Attribute is used in test of controls where: - answers -the auditor is looking for a specific
characteristic (or the absence of a specific characteristic, such as evidence of approval).
Attribute sampling - answers -is used to estimate the rate (percentage) of occurrence of
a specific quality (attribute) in a population and is used primarily for tests of controls; it
allows the auditor to quantify the sampling risk.
Variable sampling - answers -a sampling technique used to estimate the average or
total value of a population based on a sample; a statistical model used to project a
quantitative characteristic such as a monetary amount
, Compilation - answers -a service, the objective of which is to assist management in
presenting financial information in the form of financial statements without undertaking
to obtain or provide any assurance that there are no material modifications that should
be made to the financial statements in order for the statements to be in conformity with
the applicable financial reporting framework.
Compilation engagement is not an - answers -assurance engagement
A going concern - answers -the accounting assumption that a business is expected to
operate indefinitely.
Analytical procedures - answers -comparisons of recorded amounts, or ratios
developed from recorded amounts, to expectations developed by the auditor—where a
relationship is plausible and predictable (such as payroll expense divided by number of
employees compared to the prior period).
Negative confirmation request - answers -a request that the confirming party respond
directly to the auditor only if the confirming party disagrees with the information provided
in the request.
Negative confirmation requests may be used to reduce audit risk to an acceptable level
when: - answers -(a) the combined assessed level of inherent and control risk is low
(b) a large number of small balances are involved, and
(c) the auditor has no reason to believe that the recipients of the requests are unlikely to
give them consideration.
"positive" confirmation - answers -the debtor is requested to respond whether or not he
is in agreement with the information given
Positive confirmation is used when: - answers -individual account balances are
relatively large or when there is reason to believe that there may be a substantial
number of accounts in dispute or containing inaccuracies or fraud
Integrated test facility (itf) - answers -a technique for auditing through the computer
where the auditor uses artificial data to test how well the ais performs its tasks.
Accounting estimates - answers -attempt to quantify the effects of future events that
cannot be known with certainty, based on assumptions and projections
Accounting estimate require the exercise of: - answers -judgment
Accounting estimate change as: - answers -new events occur, as more experience is
acquired, or as additional information is obtained.
Review engagement - answers -engagement in which the auditor does adequate work
to provide limited assurance that the statements are prepared in compliance with the
company's reporting framework.
Ssars should include: - answers -a title that includes the word independent to clearly
indicate that it is the report of an independent accountant for a review engagement.
An addressee, based on the circumstances of the engagement.
Identification of criteria and the responsible party for the subject matter.
An introductory paragraph that identifies the entity whose financial statements have
been reviewed.
A second paragraph stating that a review is less substantial than an audit and provides
only limited assurance.
A third paragraph stating that the accountant must remain independent and meet
relevant ethical requirements of the aicpa code of conduct.
A concluding section that includes a statement about whether the accountant is aware
(or not aware) of any material modifications that should be made to the accompanying
financial statements for them to be in accordance with the applicable financial reporting
framework.
The signature of the accountant's firm.
The city and state where the accountant practices.
The date of the review report.
Attribute - answers -any characteristic that is either present or absent. In tests of
controls, the presence or absence of evidence of the application of a specified control
Attribute is used in test of controls where: - answers -the auditor is looking for a specific
characteristic (or the absence of a specific characteristic, such as evidence of approval).
Attribute sampling - answers -is used to estimate the rate (percentage) of occurrence of
a specific quality (attribute) in a population and is used primarily for tests of controls; it
allows the auditor to quantify the sampling risk.
Variable sampling - answers -a sampling technique used to estimate the average or
total value of a population based on a sample; a statistical model used to project a
quantitative characteristic such as a monetary amount
, Compilation - answers -a service, the objective of which is to assist management in
presenting financial information in the form of financial statements without undertaking
to obtain or provide any assurance that there are no material modifications that should
be made to the financial statements in order for the statements to be in conformity with
the applicable financial reporting framework.
Compilation engagement is not an - answers -assurance engagement
A going concern - answers -the accounting assumption that a business is expected to
operate indefinitely.
Analytical procedures - answers -comparisons of recorded amounts, or ratios
developed from recorded amounts, to expectations developed by the auditor—where a
relationship is plausible and predictable (such as payroll expense divided by number of
employees compared to the prior period).
Negative confirmation request - answers -a request that the confirming party respond
directly to the auditor only if the confirming party disagrees with the information provided
in the request.
Negative confirmation requests may be used to reduce audit risk to an acceptable level
when: - answers -(a) the combined assessed level of inherent and control risk is low
(b) a large number of small balances are involved, and
(c) the auditor has no reason to believe that the recipients of the requests are unlikely to
give them consideration.
"positive" confirmation - answers -the debtor is requested to respond whether or not he
is in agreement with the information given
Positive confirmation is used when: - answers -individual account balances are
relatively large or when there is reason to believe that there may be a substantial
number of accounts in dispute or containing inaccuracies or fraud
Integrated test facility (itf) - answers -a technique for auditing through the computer
where the auditor uses artificial data to test how well the ais performs its tasks.
Accounting estimates - answers -attempt to quantify the effects of future events that
cannot be known with certainty, based on assumptions and projections
Accounting estimate require the exercise of: - answers -judgment
Accounting estimate change as: - answers -new events occur, as more experience is
acquired, or as additional information is obtained.
