Auditing and Assurance services CPA
practice questions and answers
1) xSpinner, xCPA, xhad xaudited xLasco xCorp.'s xfinancial xstatements xfor xthe xpast xseveral xyears. xPrior xto xthe
xcurrent xyear's xengagement, xa xdisagreement xarose xthat xcaused xLasco xto xchange xauditing xfirms. xLasco
xhas xdemanded xthat xSpinner xprovide xLasco xwith xSpinner's xworking xpapers xso xthat xLasco xmay xshow
xthem xto xprospective xauditors xto xhelp xthem xprepare xtheir xbids xfor xLasco's xaudit xengagement. xSpinner
xrefused xand xLasco xcommenced xlitigation. xUnder xthe xethical xstandards xof xthe xprofession, xwill xSpinner
xbe xsuccessful xin xrefusing xto xturn xover xthe xworking xpapers?
A. xYes, xbecause xSpinner xis xthe xowner xof xthe xworking xpapers
B. xYes, xbecause xLasco xis xrequired xto xdirect xprospective xauditors xto xcontact xSpinner xto xmake
xarrangements xto xview xthe xworking xpapers xin xSpinner's xoffice
C. xNo, xbecause xLasco xhas xa xlegitimate xbusiness xreason xfor xdemanding xthat xSpinner xsurrender xthe
xworking xpapers
D. xNo, xbecause xit xwas xLasco's xfinancial xstatements xtha x- xAnswer x- xA. xYes, xbecause xSpinner xis xthe xowner
xof xthe xworking xpapers
2) xWhich xof xthe xfollowing xacts xby xa xCPA xis xa xviolation xof xprofessional xstandards xregarding xthe
xconfidentiality xof xclient xinformation?
A. xReleasing xfinancial xinformation xto xa xlocal xbank xwith xthe xapproval xof xthe xclient's xmail xclerk
B. xAllowing xa xreview xof xprofessional xpractice xwithout xclient xauthorization
C. xResponding xto xan xenforceable xsubpoena
D. xFaxing xa xtax xreturn xto xa xloan xofficer xat xthe xrequest xof xthe xclient x- xAnswer x- xA. xReleasing xfinancial
xinformation xto xa xlocal xbank xwith xthe xapproval xof xthe xclient's xmail xclerk
3) xIn xorder xfor xa xfirm xto xdesignate xitself xas x"Members xof xthe xAICPA":
A xall xCPA xowners xmust xbe xmembers xof xthe xAICPA.
B. xall xowners, xnot xjust xCPA xowners, xmust xbe xmembers xof xthe xAICPA.
C. xthe xmajority xof xCPA xowners xmust xbe xmembers xof xthe xAICPA.
,D. xthe xmajority xof xall xowners, xnot xjust xCPA xowners, xmust xbe xmembers xof xthe xAICPA. x- xAnswer x- xA xall
xCPA xowners xmust xbe xmembers xof xthe xAICPA.
4) xIn xperforming xan xattestation xengagement, xa xCPA xtypically:
A. xsupplies xlitigation xsupport xservices.
B. xassesses xcontrol xrisk xat xa xlow xlevel.
C. xexpresses xa xconclusion xabout xan xassertion.
D. xprovides xmanagement xconsulting xadvice. x- xAnswer x- xC. xexpresses xa xconclusion xabout xan xassertion.
5) xA xCPA xwho xis xnot xin xpublic xpractice xis xobligated xto xfollow xwhich xof xthe xfollowing xrules xof xconduct?
A. xIndependence
B. xIntegrity xand xobjectivity
C. xContingent xfees
D. xCommissions x- xAnswer x- xB. xIntegrity xand xobjectivity
6) xNile, xCPA, xon xcompleting xan xaudit, xwas xasked xby xthe xclient xto xprovide xtechnical xassistance xin
xintegrating xa xnew xIT xsystem. xThe xset xof xpronouncements xdesigned xto xguide xNile xin xthis xengagement xis
xthe xStatement(s) xon:
A. xQuality xControl xStandards.
B. xAuditing xStandards.
C. xStandards xfor xAccountants' xIT xServices.
D. xStandards xfor xConsulting xServices. x- xAnswer x- xD. xStandards xfor xConsulting xServices.
7) xAn xaccountant xis xrequired xto xcomply xwith xthe xprovisions xof xthe xStatements xon xStandards
for xAccounting xand xReview xServices x(SSARS) xwhen xperforming xwhich xof xthe xfollowing xtasks?
A. xPreparing xmonthly xjournal xentries
B. xProviding xthe xclient xwith xsoftware xto xgenerate xfinancial xstatements
C. xPreparing xfinancial xstatements xof xa xnonissuer
D. xProviding xa xblank xfinancial xstatement xformat xor xtemplate x- xAnswer x- xC. xPreparing xfinancial
xstatements xof xa xnonissuer
, 8) xIn xan xaudit xof xa xnonprofit xorganization xunder xthe xUniform xGuidance xrules, xan xauditor xmust xcomply
xwith xall xof xthe xfollowing, xexcept:
A. xplan xthe xtesting xof xinternal xcontrol xover xmajor xprograms xto xachieve xa xlow xassessed xlevel xof xcontrol
xrisk xfor xthe xassertions xrelevant xto xthe xcompliance xrequirements xfor xeach xmajor xprogram.
B. xcompliance xtesting xshall xinclude xtests xof xtransactions xand xsuch xother xauditing xprocedures xnecessary
xto xprovide xthe xauditor xsufficient xevidence xto xsupport xan xopinion xon xcompliance xfor xeach xmajor
xprogram.
C. xcorrespond xwith xall xindividuals xor xentities xthat xhave xreceived xor xmade xuse xof xthe xfederal xaward
xfunds xand xdetermine xthe xappropriateness xof xsuch xdistributions.
D. xfollow xup xon xprior xaudit xfindings. x- xAnswer x- xC. xcorrespond xwith xall xindividuals xor xentities xthat xhave
xreceived xor xmade xuse xof xthe xfederal xaward xfunds xand xdetermine xthe xappropriateness xof xsuch
xdistributions.
9) xThe xphrase x"generally xaccepted xaccounting xprinciples" xis xan xaccounting xterm xthat:
A. xincludes xbroad xguidelines xof xgeneral xapplication xbut xnot xdetailed xpractices xand xprocedures.
B. xencompasses xthe xconventions, xrules, xand xprocedures xnecessary xto xdefine xaccepted xaccounting
xpractice xat xa xparticular xtime.
C. xprovides xa xmeasure xof xconventions, xrules, xand xprocedures xgoverned xby xthe xAICPA.
D. xis xincluded xin xthe xaudit xreport xto xindicate xthat xthe xaudit xhas xbeen xconducted xin xaccordance xwith
xgenerally xaccepted xauditing xstandards x(GAAS). x- xAnswer x- xB. xencompasses xthe xconventions, xrules, xand
xprocedures xnecessary xto xdefine xaccepted xaccounting xpractice xat xa xparticular xtime.
10) xA xCPA xis xpermitted xto xdisclose xconfidential xclient xinformation xwithout xthe xconsent xof xthe xclient xto:
I. xanother xCPA xwho xhas xpurchased xthe xCPA's xtax xpractice.
II. xanother xCPA xfirm xif xthe xinformation xconcerns xsuspected xtax xreturn xirregularities.
III. xa xstate xCPA xsociety xvoluntary xquality xcontrol xreview xboard.
A. xI xand xIII xonly
B. xII xand xIII xonly
C. xII xonly
D. xIII xonly x- xAnswer x- xD. xIII xonly
11) xWhat xis xthe xdefinition xof xfraud xin xan xaudit xof xfinancial xstatements?
practice questions and answers
1) xSpinner, xCPA, xhad xaudited xLasco xCorp.'s xfinancial xstatements xfor xthe xpast xseveral xyears. xPrior xto xthe
xcurrent xyear's xengagement, xa xdisagreement xarose xthat xcaused xLasco xto xchange xauditing xfirms. xLasco
xhas xdemanded xthat xSpinner xprovide xLasco xwith xSpinner's xworking xpapers xso xthat xLasco xmay xshow
xthem xto xprospective xauditors xto xhelp xthem xprepare xtheir xbids xfor xLasco's xaudit xengagement. xSpinner
xrefused xand xLasco xcommenced xlitigation. xUnder xthe xethical xstandards xof xthe xprofession, xwill xSpinner
xbe xsuccessful xin xrefusing xto xturn xover xthe xworking xpapers?
A. xYes, xbecause xSpinner xis xthe xowner xof xthe xworking xpapers
B. xYes, xbecause xLasco xis xrequired xto xdirect xprospective xauditors xto xcontact xSpinner xto xmake
xarrangements xto xview xthe xworking xpapers xin xSpinner's xoffice
C. xNo, xbecause xLasco xhas xa xlegitimate xbusiness xreason xfor xdemanding xthat xSpinner xsurrender xthe
xworking xpapers
D. xNo, xbecause xit xwas xLasco's xfinancial xstatements xtha x- xAnswer x- xA. xYes, xbecause xSpinner xis xthe xowner
xof xthe xworking xpapers
2) xWhich xof xthe xfollowing xacts xby xa xCPA xis xa xviolation xof xprofessional xstandards xregarding xthe
xconfidentiality xof xclient xinformation?
A. xReleasing xfinancial xinformation xto xa xlocal xbank xwith xthe xapproval xof xthe xclient's xmail xclerk
B. xAllowing xa xreview xof xprofessional xpractice xwithout xclient xauthorization
C. xResponding xto xan xenforceable xsubpoena
D. xFaxing xa xtax xreturn xto xa xloan xofficer xat xthe xrequest xof xthe xclient x- xAnswer x- xA. xReleasing xfinancial
xinformation xto xa xlocal xbank xwith xthe xapproval xof xthe xclient's xmail xclerk
3) xIn xorder xfor xa xfirm xto xdesignate xitself xas x"Members xof xthe xAICPA":
A xall xCPA xowners xmust xbe xmembers xof xthe xAICPA.
B. xall xowners, xnot xjust xCPA xowners, xmust xbe xmembers xof xthe xAICPA.
C. xthe xmajority xof xCPA xowners xmust xbe xmembers xof xthe xAICPA.
,D. xthe xmajority xof xall xowners, xnot xjust xCPA xowners, xmust xbe xmembers xof xthe xAICPA. x- xAnswer x- xA xall
xCPA xowners xmust xbe xmembers xof xthe xAICPA.
4) xIn xperforming xan xattestation xengagement, xa xCPA xtypically:
A. xsupplies xlitigation xsupport xservices.
B. xassesses xcontrol xrisk xat xa xlow xlevel.
C. xexpresses xa xconclusion xabout xan xassertion.
D. xprovides xmanagement xconsulting xadvice. x- xAnswer x- xC. xexpresses xa xconclusion xabout xan xassertion.
5) xA xCPA xwho xis xnot xin xpublic xpractice xis xobligated xto xfollow xwhich xof xthe xfollowing xrules xof xconduct?
A. xIndependence
B. xIntegrity xand xobjectivity
C. xContingent xfees
D. xCommissions x- xAnswer x- xB. xIntegrity xand xobjectivity
6) xNile, xCPA, xon xcompleting xan xaudit, xwas xasked xby xthe xclient xto xprovide xtechnical xassistance xin
xintegrating xa xnew xIT xsystem. xThe xset xof xpronouncements xdesigned xto xguide xNile xin xthis xengagement xis
xthe xStatement(s) xon:
A. xQuality xControl xStandards.
B. xAuditing xStandards.
C. xStandards xfor xAccountants' xIT xServices.
D. xStandards xfor xConsulting xServices. x- xAnswer x- xD. xStandards xfor xConsulting xServices.
7) xAn xaccountant xis xrequired xto xcomply xwith xthe xprovisions xof xthe xStatements xon xStandards
for xAccounting xand xReview xServices x(SSARS) xwhen xperforming xwhich xof xthe xfollowing xtasks?
A. xPreparing xmonthly xjournal xentries
B. xProviding xthe xclient xwith xsoftware xto xgenerate xfinancial xstatements
C. xPreparing xfinancial xstatements xof xa xnonissuer
D. xProviding xa xblank xfinancial xstatement xformat xor xtemplate x- xAnswer x- xC. xPreparing xfinancial
xstatements xof xa xnonissuer
, 8) xIn xan xaudit xof xa xnonprofit xorganization xunder xthe xUniform xGuidance xrules, xan xauditor xmust xcomply
xwith xall xof xthe xfollowing, xexcept:
A. xplan xthe xtesting xof xinternal xcontrol xover xmajor xprograms xto xachieve xa xlow xassessed xlevel xof xcontrol
xrisk xfor xthe xassertions xrelevant xto xthe xcompliance xrequirements xfor xeach xmajor xprogram.
B. xcompliance xtesting xshall xinclude xtests xof xtransactions xand xsuch xother xauditing xprocedures xnecessary
xto xprovide xthe xauditor xsufficient xevidence xto xsupport xan xopinion xon xcompliance xfor xeach xmajor
xprogram.
C. xcorrespond xwith xall xindividuals xor xentities xthat xhave xreceived xor xmade xuse xof xthe xfederal xaward
xfunds xand xdetermine xthe xappropriateness xof xsuch xdistributions.
D. xfollow xup xon xprior xaudit xfindings. x- xAnswer x- xC. xcorrespond xwith xall xindividuals xor xentities xthat xhave
xreceived xor xmade xuse xof xthe xfederal xaward xfunds xand xdetermine xthe xappropriateness xof xsuch
xdistributions.
9) xThe xphrase x"generally xaccepted xaccounting xprinciples" xis xan xaccounting xterm xthat:
A. xincludes xbroad xguidelines xof xgeneral xapplication xbut xnot xdetailed xpractices xand xprocedures.
B. xencompasses xthe xconventions, xrules, xand xprocedures xnecessary xto xdefine xaccepted xaccounting
xpractice xat xa xparticular xtime.
C. xprovides xa xmeasure xof xconventions, xrules, xand xprocedures xgoverned xby xthe xAICPA.
D. xis xincluded xin xthe xaudit xreport xto xindicate xthat xthe xaudit xhas xbeen xconducted xin xaccordance xwith
xgenerally xaccepted xauditing xstandards x(GAAS). x- xAnswer x- xB. xencompasses xthe xconventions, xrules, xand
xprocedures xnecessary xto xdefine xaccepted xaccounting xpractice xat xa xparticular xtime.
10) xA xCPA xis xpermitted xto xdisclose xconfidential xclient xinformation xwithout xthe xconsent xof xthe xclient xto:
I. xanother xCPA xwho xhas xpurchased xthe xCPA's xtax xpractice.
II. xanother xCPA xfirm xif xthe xinformation xconcerns xsuspected xtax xreturn xirregularities.
III. xa xstate xCPA xsociety xvoluntary xquality xcontrol xreview xboard.
A. xI xand xIII xonly
B. xII xand xIII xonly
C. xII xonly
D. xIII xonly x- xAnswer x- xD. xIII xonly
11) xWhat xis xthe xdefinition xof xfraud xin xan xaudit xof xfinancial xstatements?
