Audit CPA Exam with 2023 100% correct solutions

Management is responsible for - Correct Answer - Financial statements - the preparation and fair presentation Internal controls - design, implementation and maintenance relevant to the FS Providing auditor with access to info and persons needed to complete the audit The preparation and fair presentation of the FS requires - Correct Answer - identification of the applicable financial reporting framework preparation and fair presentation in accordance with framework inclusion of adequate description of the framework to obtain reasonable assurance - Correct Answer - plan the work and properly supervise the assistants determine and apply appropriate materiality levels identify and assess risks of material misstatement, whether due to error or fraud and obtain sufficient appropriate audit evidence The applicable financial reporting framework - Correct Answer - The financial reporting framework that is acceptable in view of the nature of the entity and the objective of the financial statements Includes general purpose: designed to meet needs of a wide range of users (GAAP & IFRS) and special purpose frameworks Fair presentation frameworks - Correct Answer - All financial reporting frameworks in the US are fair presentation frameworks Acknowledges explicity or implicitly that to achieve fair presentation of the FS, it may be necessary for management to provide disclosures beyond those specifically required Acknowledges explicitly that it may be necessary for mgmt (RARE) to depart from a requirement to achieve fair presentationAuditing standards - Correct Answer - (GAAS) Generally accepted auditing standards - mandatory on all audit engagements (GAGAS) Generally accepted government auditing standards - audits of government organizations, programs or activities that receive government funds (PCAOB) - established pursuant to SOX - establish auditing standards for issuers (ISA) International standards of auditing The term "must" or "is required" - Correct Answer - indicates an unconditional requirement must be followed in all cases The term "should" - Correct Answer - presumptively mandatory requirement must be followed in all cases where the requirement is relevant but allows for departures in rare circumstances if there is appropriate justification Conditions that indicate possible fraud - Correct Answer - Pressure Opportunity Rationalization If there is substantial doubt about going concern, the auditor should: - Correct Answer - consider the adequacy of the disclosure about the entity's possible inability to continue as a going concern