Auditing CPA Test Prep Questions WITH MULTIPLE
QUESTIONS AND THE CORRECT ANSWERS EXAMS
FROM THE BEST INSTITUTIONS ACROSS THE GLOBE
Graded questions with answers
A review of a nonpublic company's financial statements is considered: - CORRECT
ANSWER- -An assurance engagement AND an attest engagement
**
professional standards consider review to be both assurance and attest engagements
Which of the following types of services is most directly designed to improve the quality of
information, or its context, for decision makers? - CORRECT ANSWER- -Assurance services
***
Special Committee on Assurance Services (the Elliott Committee), defined assurance
services as independent professional services that improve quality of information, or its
context, for decision makers
An accountant's objective of a review of the financial statements of a nonissuer (nonpublic
company) is to provide what type of assurance? - CORRECT ANSWER- -Limited assurance.
**
reviews result in limited (negative) assurance
When making a review of interim financial information the auditor's work consists primarily
of - CORRECT ANSWER- -Making inquiries and performing analytical procedures
concerning significant accounting matters.
***
a review of interim financial information consists primarily of inquiries and analytical
procedures concerning significant accounting matters relating to the financial data being
reported
,Which of the following activities would most likely be considered an attestation
engagement? - CORRECT ANSWER- -Issuing a report about a firm's compliance with laws
and regulations.
***
the attest standards provide for issuance of a report about a firm's compliance with laws
and regulations
Which of the following underlies the application of generally accepted auditing standards,
particularly the standards of fieldwork and reporting? - CORRECT ANSWER- -The elements
of materiality and audit risk
***
the elements of materiality and audit risk underlie the application of all the standards,
particularly the standards of fieldwork and reporting
International Standards on Auditing are issued by - CORRECT ANSWER- -The International
Federation of Accountants
***
International Auditing Standards are issued by the International Auditing and Assurance
Standards Board of the International Federation of Accountants
Which of the following AICPA standards did the PCAOB not adopt as a part of its interim
standards? - CORRECT ANSWER- -Accounting and Review Services Standards
***
the PCAOB did not adopt the AICPA's Accounting and Review Services Standards because
they only apply to nonpublic companies ("non-issuers").
Which of the following is most accurate relating to the International Auditing and
Assurance Standards Board (IAASB) and the International Federation of Accountants
(IFAC)? - CORRECT ANSWER- -IAASB is a Board within IFAC.
, ****
IAASB is a Board within the broader organization, IFAC
The Public Company Accounting Oversight Board (PCAOB) has authority to establish which
of the following relating to public companies? - CORRECT ANSWER- -Both Attestation
standards AND Independence standards
***
the PCAOB may establish attestation standards, independence standards, auditing
standards, and quality control standards
An auditor's independence is considered impaired if the auditor has - CORRECT ANSWER-
-A joint, closely held business investment with the client that is material to the auditor's net
worth
Interpretation 101-1 prohibits joint closely held investments that are material to the auditor
Under the ethical standards of the profession, which of the following investments by a CPA
in a corporate client is an indirect financial interest? - CORRECT ANSWER- -An investment
held through a regulated mutual fund
***
an investment in a regulated mutual fund is an indirect investment is the stock of the
companies in the fund as defined under Rule 101 on independence
In which of the following situations would a CPA firm be independent with respect to an
audit client? - CORRECT ANSWER- -A professional employee assigned to the engagement
has a spouse that is employed as a salesperson by the client
***
a covered member's spouse may be employed by an attest client providing that he or she is
not employed in a key position
QUESTIONS AND THE CORRECT ANSWERS EXAMS
FROM THE BEST INSTITUTIONS ACROSS THE GLOBE
Graded questions with answers
A review of a nonpublic company's financial statements is considered: - CORRECT
ANSWER- -An assurance engagement AND an attest engagement
**
professional standards consider review to be both assurance and attest engagements
Which of the following types of services is most directly designed to improve the quality of
information, or its context, for decision makers? - CORRECT ANSWER- -Assurance services
***
Special Committee on Assurance Services (the Elliott Committee), defined assurance
services as independent professional services that improve quality of information, or its
context, for decision makers
An accountant's objective of a review of the financial statements of a nonissuer (nonpublic
company) is to provide what type of assurance? - CORRECT ANSWER- -Limited assurance.
**
reviews result in limited (negative) assurance
When making a review of interim financial information the auditor's work consists primarily
of - CORRECT ANSWER- -Making inquiries and performing analytical procedures
concerning significant accounting matters.
***
a review of interim financial information consists primarily of inquiries and analytical
procedures concerning significant accounting matters relating to the financial data being
reported
,Which of the following activities would most likely be considered an attestation
engagement? - CORRECT ANSWER- -Issuing a report about a firm's compliance with laws
and regulations.
***
the attest standards provide for issuance of a report about a firm's compliance with laws
and regulations
Which of the following underlies the application of generally accepted auditing standards,
particularly the standards of fieldwork and reporting? - CORRECT ANSWER- -The elements
of materiality and audit risk
***
the elements of materiality and audit risk underlie the application of all the standards,
particularly the standards of fieldwork and reporting
International Standards on Auditing are issued by - CORRECT ANSWER- -The International
Federation of Accountants
***
International Auditing Standards are issued by the International Auditing and Assurance
Standards Board of the International Federation of Accountants
Which of the following AICPA standards did the PCAOB not adopt as a part of its interim
standards? - CORRECT ANSWER- -Accounting and Review Services Standards
***
the PCAOB did not adopt the AICPA's Accounting and Review Services Standards because
they only apply to nonpublic companies ("non-issuers").
Which of the following is most accurate relating to the International Auditing and
Assurance Standards Board (IAASB) and the International Federation of Accountants
(IFAC)? - CORRECT ANSWER- -IAASB is a Board within IFAC.
, ****
IAASB is a Board within the broader organization, IFAC
The Public Company Accounting Oversight Board (PCAOB) has authority to establish which
of the following relating to public companies? - CORRECT ANSWER- -Both Attestation
standards AND Independence standards
***
the PCAOB may establish attestation standards, independence standards, auditing
standards, and quality control standards
An auditor's independence is considered impaired if the auditor has - CORRECT ANSWER-
-A joint, closely held business investment with the client that is material to the auditor's net
worth
Interpretation 101-1 prohibits joint closely held investments that are material to the auditor
Under the ethical standards of the profession, which of the following investments by a CPA
in a corporate client is an indirect financial interest? - CORRECT ANSWER- -An investment
held through a regulated mutual fund
***
an investment in a regulated mutual fund is an indirect investment is the stock of the
companies in the fund as defined under Rule 101 on independence
In which of the following situations would a CPA firm be independent with respect to an
audit client? - CORRECT ANSWER- -A professional employee assigned to the engagement
has a spouse that is employed as a salesperson by the client
***
a covered member's spouse may be employed by an attest client providing that he or she is
not employed in a key position
