CPA AUD EXAM WITH COMPLETE SOLUTIONS
LATEST UPDATE A+ GRADED
An auditor of a nonissuer must conduct the audit in accordance with? - ANSWER ASB
Standards
What provides the most authoritative guidance for the auditor of a nonissuer? - ANSWER
General guidance provided by a Statement on Auditing Standards
What are AICPA audit and accounting guides and SAS interpretations? - ANSWER
Interpretive publications that provide guidance regarding how SAS's should be applied
in specific situations. Not as authoritative as SAS's.
Which is the word or phrase used in standards to indicate something which is presumed
to be mandatory? - ANSWER Should
Which is the word or phrase used in standards to indicate an unconditional
requirement? - ANSWER Must
In obtaining reasonable assurance what four things must the auditor do? - ANS 1) Plan
the work and properly supervise any assistants, 2) Determine and apply appropriate
materiality levels, 3) Identify and assess risks of material misstatement whether caused
by error or fraud, 4) Obtain sufficient and appropriate audit evidence.
What is it that management is responsible for in an audit? - ANWER 1) Preparation and
fair presentation of the financial statements in accordance with the applicable financial
reporting framework, 2) The design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that
are free of material misstatement due to error or fraud, 3) Providing the auditor with
access to information and persons within the entity needed to complete the audit
,If an audit is required to comply with auditing requirements other than GAAS, what must
be done. - ANSWER GAAS must be followed, IN ADDITION to the additionally required
standard.
Are an auditor's responsibilities for audited financial statements confined to the
expression of the auditor's opinion? - ANSWER Yes, an auditor's responsibility is to
express an opinion on financial statements based on an audit
Can an auditor prepare a financial statement of an entity from information provided by
management's accounting system? - ANSWER Yes. This is called compilation
engagement.
If an auditor is auditing a company which has a material departure from GAAP, but the
departure is for good reason and would be misleading if stated at GAAP, what should
the auditor give for an opinion? - ANSWER An unmodified opinion with a separate
paragraph explaining the unusual situation.
If an auditor of a nonissuer concludes that a client's illegal act, which has material
impact on the financial statements, has not been properly accounted or disclosed. The
auditor should express one of which two types of opinions? - ANSWER Qualified Opinion
or an adverse opinion.
To whom should auditors address their report? - ANSWER To the entity that
engagement them.
What paragraphs of a nonissuer auditor's report under US auditing standards should
the following be addressed?
GAAS
Opinion on
Auditor's Responsibility Paragraph
Name
GAAP Opinion Paragraph
, Which of the following is not required on a CPA's report on audited financial statements
under US auditing standards?
I. Management's responsibility for the financial statements
II. Assessing the appropriateness of accounting policies used
III. Material estimates made by management
4) The auditor's judgment about the factors affecting sampling risk. APP The auditor's
judgment about the factors affecting sampling risk.
Which paragraph of an auditor's report for a nonissuer does an auditor communicate
the nature of the engagement and the specific financial statements covered by the
audit? - ANS The introductory paragraph.
What does the scope paragraph of a nonissuer audit report include? - ANSWER The
scope paragraph does not exist in a nonissuer audit report.
*
What is the earliest date for which an auditor may date its audit report? - ANSWER The
date the auditor has obtained sufficient and appropriate audit evidence to support the
opinion.
How does the auditor make the following representations when issuing the auditor's
report on comparative financial statements under US auditing standards?
1) Obtaining evidence that is sufficient and appropriate
2) Consistent application of accounting principles-ANSWER Obtaining evidence that is
sufficient and appropriate: Explicitly
Consistent application of accounting principles: Implicitly
FOR AN ISSUER, WHERE WOULD MENTION OF THE PCAOB APPEAR IN THE AUDIT
REPORT? - ANSWER In the scope paragraph indicating the engagement was performed
in accordance with PCAOB standards.
FOR AN ISSUER, WHERE WOULD MENTION OF GAAP BE APPEAR IN THE AUDIT
REPORT? - ANSWER In the opinion paragraph
LATEST UPDATE A+ GRADED
An auditor of a nonissuer must conduct the audit in accordance with? - ANSWER ASB
Standards
What provides the most authoritative guidance for the auditor of a nonissuer? - ANSWER
General guidance provided by a Statement on Auditing Standards
What are AICPA audit and accounting guides and SAS interpretations? - ANSWER
Interpretive publications that provide guidance regarding how SAS's should be applied
in specific situations. Not as authoritative as SAS's.
Which is the word or phrase used in standards to indicate something which is presumed
to be mandatory? - ANSWER Should
Which is the word or phrase used in standards to indicate an unconditional
requirement? - ANSWER Must
In obtaining reasonable assurance what four things must the auditor do? - ANS 1) Plan
the work and properly supervise any assistants, 2) Determine and apply appropriate
materiality levels, 3) Identify and assess risks of material misstatement whether caused
by error or fraud, 4) Obtain sufficient and appropriate audit evidence.
What is it that management is responsible for in an audit? - ANWER 1) Preparation and
fair presentation of the financial statements in accordance with the applicable financial
reporting framework, 2) The design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that
are free of material misstatement due to error or fraud, 3) Providing the auditor with
access to information and persons within the entity needed to complete the audit
,If an audit is required to comply with auditing requirements other than GAAS, what must
be done. - ANSWER GAAS must be followed, IN ADDITION to the additionally required
standard.
Are an auditor's responsibilities for audited financial statements confined to the
expression of the auditor's opinion? - ANSWER Yes, an auditor's responsibility is to
express an opinion on financial statements based on an audit
Can an auditor prepare a financial statement of an entity from information provided by
management's accounting system? - ANSWER Yes. This is called compilation
engagement.
If an auditor is auditing a company which has a material departure from GAAP, but the
departure is for good reason and would be misleading if stated at GAAP, what should
the auditor give for an opinion? - ANSWER An unmodified opinion with a separate
paragraph explaining the unusual situation.
If an auditor of a nonissuer concludes that a client's illegal act, which has material
impact on the financial statements, has not been properly accounted or disclosed. The
auditor should express one of which two types of opinions? - ANSWER Qualified Opinion
or an adverse opinion.
To whom should auditors address their report? - ANSWER To the entity that
engagement them.
What paragraphs of a nonissuer auditor's report under US auditing standards should
the following be addressed?
GAAS
Opinion on
Auditor's Responsibility Paragraph
Name
GAAP Opinion Paragraph
, Which of the following is not required on a CPA's report on audited financial statements
under US auditing standards?
I. Management's responsibility for the financial statements
II. Assessing the appropriateness of accounting policies used
III. Material estimates made by management
4) The auditor's judgment about the factors affecting sampling risk. APP The auditor's
judgment about the factors affecting sampling risk.
Which paragraph of an auditor's report for a nonissuer does an auditor communicate
the nature of the engagement and the specific financial statements covered by the
audit? - ANS The introductory paragraph.
What does the scope paragraph of a nonissuer audit report include? - ANSWER The
scope paragraph does not exist in a nonissuer audit report.
*
What is the earliest date for which an auditor may date its audit report? - ANSWER The
date the auditor has obtained sufficient and appropriate audit evidence to support the
opinion.
How does the auditor make the following representations when issuing the auditor's
report on comparative financial statements under US auditing standards?
1) Obtaining evidence that is sufficient and appropriate
2) Consistent application of accounting principles-ANSWER Obtaining evidence that is
sufficient and appropriate: Explicitly
Consistent application of accounting principles: Implicitly
FOR AN ISSUER, WHERE WOULD MENTION OF THE PCAOB APPEAR IN THE AUDIT
REPORT? - ANSWER In the scope paragraph indicating the engagement was performed
in accordance with PCAOB standards.
FOR AN ISSUER, WHERE WOULD MENTION OF GAAP BE APPEAR IN THE AUDIT
REPORT? - ANSWER In the opinion paragraph
