Top Mark Questions and Correct Verified Answers
AUD CPA Exam Questions and Correct
Verified Answers
SU 1
✓ Engagement Responsibilities
Nature of an Attest Engagement
✓ Gives an assertion or opinion on the material of the responsible party. They only
apply to a CPA operating in public practice. Some services require a CPA to
disclaim assurance.
Attestation Standards
✓ General Standards (training, proficiency, knowledge). Should be measurable.
CPA must maintain independence.
✓ Field Work Standards (planning and supervision & sufficient appropriate
evidence)
✓ Reporting Standards (Character of Engagement, conclusion, reservations,
restrictions)
✓
✓ Acronym: TIPSC PE CCRR
Generally Accepted Auditing Standards and the International Auditing Standards
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ The General Standards were codified between GAAS and the AICPA's ASB. They
basically converge with international standards but still differ in some areas.
Who regulates issuers versus non-issuer audits?
✓ Issuers Audit = PCAOB, Non-issuer = ASB Standards
Who issues Government Audit Standards?
✓ The yellowbook is the government standards and is issued by the Governmental
Accountability Office. It is ASB unless modified. Federal Awards may require a
single audit which falls under the OMB Single Audit Act.
Purpose of an Audit
✓ To provide financial statement users with an opinion on whether the financial
statements are presented fairly in accordance with the applicable financial
reporting framework and free from material misstatement whether due to fraud
or error.
Professional Skepticism
✓ Required by auditors when performing an audit.
Audit Risk
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ The risk that an audit will not detect a material misstatement. There will always
be audit risk, but the goal is to get that risk as close to zero as possible.
Managements Assertions
✓ CAVE CROC
✓ Completeness
✓ Accuracy
✓ Valuation and Allocation
✓ Existence
✓ Cutoff
✓ Rights and Obligations
✓ Occurrence
✓ Classification and Understandability
Assertions about Transactions and Events (P&L and Cash Flows)
✓ Occurrence, Completeness, Accuracy, Cutoff, Classification
Assertions about Account Balances (B/S)
✓ Existence, Rights and Obligations, Completeness, Valuation and Allocation
Assertions about Presentation and Disclosure (Mainly notes to financial statements)
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ Occurrence and Rights and Obligations, Completeness, Classification and
Understandability, Accuracy and Valuation
PCAOB Assertions
✓ Same as above but they do not explicitly address accuracy.
Professional Responsibilities of Auditors
✓ Must comply with unconditional requirements (i.e. independence).
Additional Professional Services
✓ Preparation (Non-attest), Compilation (Non-attest but must be independent),
Review (Limited assurance, performed by inquiry and analytical procedure),
agreed upon procedures (attest, must be independent), Prospective Financial
Statements, Examinations of Internal Control over Financial Reporting
Assurance Services
✓ Assurance > Attest > Audit
✓ Does not include consulting services
✓ Designed to enhance decision making
Quality Control
Top Mark !!!
AUD CPA Exam Questions and Correct
Verified Answers
SU 1
✓ Engagement Responsibilities
Nature of an Attest Engagement
✓ Gives an assertion or opinion on the material of the responsible party. They only
apply to a CPA operating in public practice. Some services require a CPA to
disclaim assurance.
Attestation Standards
✓ General Standards (training, proficiency, knowledge). Should be measurable.
CPA must maintain independence.
✓ Field Work Standards (planning and supervision & sufficient appropriate
evidence)
✓ Reporting Standards (Character of Engagement, conclusion, reservations,
restrictions)
✓
✓ Acronym: TIPSC PE CCRR
Generally Accepted Auditing Standards and the International Auditing Standards
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ The General Standards were codified between GAAS and the AICPA's ASB. They
basically converge with international standards but still differ in some areas.
Who regulates issuers versus non-issuer audits?
✓ Issuers Audit = PCAOB, Non-issuer = ASB Standards
Who issues Government Audit Standards?
✓ The yellowbook is the government standards and is issued by the Governmental
Accountability Office. It is ASB unless modified. Federal Awards may require a
single audit which falls under the OMB Single Audit Act.
Purpose of an Audit
✓ To provide financial statement users with an opinion on whether the financial
statements are presented fairly in accordance with the applicable financial
reporting framework and free from material misstatement whether due to fraud
or error.
Professional Skepticism
✓ Required by auditors when performing an audit.
Audit Risk
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ The risk that an audit will not detect a material misstatement. There will always
be audit risk, but the goal is to get that risk as close to zero as possible.
Managements Assertions
✓ CAVE CROC
✓ Completeness
✓ Accuracy
✓ Valuation and Allocation
✓ Existence
✓ Cutoff
✓ Rights and Obligations
✓ Occurrence
✓ Classification and Understandability
Assertions about Transactions and Events (P&L and Cash Flows)
✓ Occurrence, Completeness, Accuracy, Cutoff, Classification
Assertions about Account Balances (B/S)
✓ Existence, Rights and Obligations, Completeness, Valuation and Allocation
Assertions about Presentation and Disclosure (Mainly notes to financial statements)
Top Mark !!!
, Top Mark Questions and Correct Verified Answers
✓ Occurrence and Rights and Obligations, Completeness, Classification and
Understandability, Accuracy and Valuation
PCAOB Assertions
✓ Same as above but they do not explicitly address accuracy.
Professional Responsibilities of Auditors
✓ Must comply with unconditional requirements (i.e. independence).
Additional Professional Services
✓ Preparation (Non-attest), Compilation (Non-attest but must be independent),
Review (Limited assurance, performed by inquiry and analytical procedure),
agreed upon procedures (attest, must be independent), Prospective Financial
Statements, Examinations of Internal Control over Financial Reporting
Assurance Services
✓ Assurance > Attest > Audit
✓ Does not include consulting services
✓ Designed to enhance decision making
Quality Control
Top Mark !!!
