2025 Audit CPA Exam Questions & Answers Auditing & Attestation (AUD)
AICPA-Aligned Becker-Based Full Coverage Ethics, Risk, Evidence, Internal
Control Graded A+
Existence |Assertion |- |answersAssets/revenues: |whether |the |account |actually |exists |& |they |are |not |
overstated
Completeness |Assertion |- |answersLiabilities/expenses: |whether |the |items |were |actually |recorded |& |
the |accounts |are |not |understated
Confirmations |- |answers-provide |evidence |of |existence
-2 |forms |of |confirmation: |positive |& |negative |(blank)
-electronic |confirmations |must |be |verified |& |non-responses |must |be |followed |up |or |alt |procedures |(if |
not |GAAP |problem)
Revenue |cycle |- |answerssales, |accounts |receivable, |and |cash |receipts
Expenditure |cycle |- |answerspurchases, |accounts |payable, |and |cash |disbursements
Purchasing |department |- |answersThis |department |enters/approves |Purchase |Order |and |participates |in
|vendor |selection
Receiving |department |- |answersaccepts |goods |for |approved |purchases, |counts |and |inspects |goods, |
and |prepares |a |receiving |report.
Accounts |payable |department |- |answersrecords |the |payable |and |approves |the |invoice
Treasurer |department |- |answers- |should |make |the |payment
- |once |signed, |the |check |should |be |mailed |to |the |payee |by |the |check |signer |or |an |employee |
operating |under |the |supervision |of |the |check |signer |to |prevent |defalcations |of |checks.
Cash |cycle |- |answerscash |receipts |and |disbursements
What |is |Lapping?
How |Can |Lapping |be |deterred?
What |are |the |auditing |procedures |for |Lapping? |- |answers- |a |defalcation |in |which |a |cash |shortage |is |
concealed |by |applying |later |customer |remittances |to |a |receivable |account |from |which |money |was |
stolen
- |can |be |deterred |by |appropriate |segregation |of |duties |between |receiving |cash |and |posting |to |the |
accounts |receivable |ledger. |This |makes |it |more |difficult |for |the |employee |who |is |stealing |the |cash |to |
cover |it |up |through |inappropriate |remittance |credits.
,- |an |auditor |would |compare |the |date |the |checks |are |deposited |per |bank |statements |with |the |date |
remittance |credits |are |recorded |(not |by |reviewing |bank |transfers)
What |is |Kiting?
What |does |frequent |Kiting |result |in?
How |does |an |auditor |detect |Kiting? |- |answers- |concealing |a |cash |shortage |by |depositing |in |one |bank |
an |unrecorded |check |of |another |disbursement |bank, |effectively |recording |the |same |funds |in |both |
bank |accounts
- |Frequent |kiting |may |result |in |a |high |level |of |deposits |coupled |with |a |low |average |balance.
-An |auditor |would |most |likely |detect |kiting |by |reviewing |the |bank |transfer |schedule |and |following-up |
on |all |transfers |for |which |the |receipt |date |per |bank |is |recorded |in |the |accounting |period |before |the |
disbursement |date.
Relevant |assertions |for |auditing |cash |- |answerscompleteness, |valuation |and |allocation, |and |existence
Inventory |cycle |- |answerspurchases |and |sales |of |inv
Investment |cycle |- |answerspurchases |and |sales |of |stocks, |bonds, |and |derivative |instruments
Auditing |procedures |for |investments |- |answers-confirmation
-examination |of |securities |on |hand
-cutoff |testing
-review |of |board |minutes
-recalculation
Investments |should |be |measured |at |- |answersfair |value
Other |transaction |cycles: |PPE |- |answers-includes |all |tangible |assets |used |in |the |operation |of |a |
business |and |not |acquired |for |resale
-includes |purchases, |R&M, |depreciation, |disposal, |and |leasing
Other |transaction |cycles: |Payroll |and |personnel |cycle |- |answersrecord |keeping |of |employees |and |
calculation |and |authorization |of |payroll |disbursements
Completeness |assertion |for |PPE |- |answersselect |a |sample |of |fixed |asset |purchase |requisitions |and |
trace |to |receiving |reports |and |the |fixed |asset |subsidiary |ledger
Segregation |of |duties |for |payroll |- |answers-authorization: |operating |managers |and |personnel
-record |keeping: |payroll
-custody: |treasurer
Financing |cycle |- |answersincludes |all |debt |and |equity |transactions
, An |Entity's |Ability |to |Continue |as |a |Going |Concern |- |answersNon-issuer: |When |an |auditor |concludes |
that |substantial |doubt |remains |about |an |entity's |ability |to |continue |as |a |going |concern |the |auditor |
should |add |a |separate |section |to |the |auditors |report |with |the |heading |"substantial |doubt |about |the |
entity's |ability |to |continue |as |a |going |concern" |to |the |UM |opinion
Issuer: |When |an |auditor |concludes |that |substantial |doubt |remains |about |an |entity's |ability |to |
continue |as |a |going |concern |the |auditor |should |add |an |explanatory |paragraph |to |the |auditors |report |
with |the |heading |"substantial |doubt |about |the |entity's |ability |to |continue |as |a |going |concern" |to |the |
UQ |opinion
At |conclusion |of |fieldwork |the |auditor |is |required |to |- |answersobtain |a |management |representation |
letter |which |is |dated |the |same |date |as |the |audit |report
Managements |refusal |to |furnish |written |rep |results |in |- |answerseither |a |disclaimer |of |opinion |or |
withdrawal |from |the |engagement
For |FS |audit |of |a |non-issuer |SD |& |MW |- |answersmust |be |communicated |to |mngmt |and |those |charged
|with |governance |in |writing |within |60 |days |of |report |release |date
All |other |control |deficiencies |should |be |- |answerscommunicated |to |mngmt |only |either |orally |or |in |
writing |within |60 |days |of |report |release |date
Lien |- |answersa |right |to |keep |possession |of |property |belonging |to |another |person |until |a |debt |owed |
by |that |person |is |discharged.
What |is |the |completeness |assertion |testing? |- |answersa |transaction |occurring |in |the |period |has |been |
properly |recorded
The |authority |to |accept |incoming |goods |should |be |based |upon |an? |- |answersapproved |purchase |
order
The |primary |responsibility |of |a |bank |acting |as |a |registrar |of |capital |stock |is |to |- |answersverify |that |
stock |is |issued |in |accordance |with |authorization |of |BOD |and |articles |of |incorporation
Vouchers |payable |dept |- |answersresponsible |for:
-approving |vouchers |for |payment
-reconciling |the |vendor |invoice |with |related |receiving |report
Unrecorded |liability |- |answersexamine |receiving |report |for |items |received |before |YE |but |not |yet |
recorded
Search |for |unrecorded |payable |"out |of |period |search" |- |answerscompare |cash |payments |occurring |
after |BS |date |with |AP |TB |to |determine |that |disbursements |pertain |to |PY's |business |has |been |properly
|accrued
Examination |of |prospective |fs |with |no |reasonable |basis |is |what |opinion |type? |- |answersadverse
Report |on |AUP |includes |a? |- |answersdisclaimer |of |responsibility |for |sufficiency |of |those |procedures
AICPA-Aligned Becker-Based Full Coverage Ethics, Risk, Evidence, Internal
Control Graded A+
Existence |Assertion |- |answersAssets/revenues: |whether |the |account |actually |exists |& |they |are |not |
overstated
Completeness |Assertion |- |answersLiabilities/expenses: |whether |the |items |were |actually |recorded |& |
the |accounts |are |not |understated
Confirmations |- |answers-provide |evidence |of |existence
-2 |forms |of |confirmation: |positive |& |negative |(blank)
-electronic |confirmations |must |be |verified |& |non-responses |must |be |followed |up |or |alt |procedures |(if |
not |GAAP |problem)
Revenue |cycle |- |answerssales, |accounts |receivable, |and |cash |receipts
Expenditure |cycle |- |answerspurchases, |accounts |payable, |and |cash |disbursements
Purchasing |department |- |answersThis |department |enters/approves |Purchase |Order |and |participates |in
|vendor |selection
Receiving |department |- |answersaccepts |goods |for |approved |purchases, |counts |and |inspects |goods, |
and |prepares |a |receiving |report.
Accounts |payable |department |- |answersrecords |the |payable |and |approves |the |invoice
Treasurer |department |- |answers- |should |make |the |payment
- |once |signed, |the |check |should |be |mailed |to |the |payee |by |the |check |signer |or |an |employee |
operating |under |the |supervision |of |the |check |signer |to |prevent |defalcations |of |checks.
Cash |cycle |- |answerscash |receipts |and |disbursements
What |is |Lapping?
How |Can |Lapping |be |deterred?
What |are |the |auditing |procedures |for |Lapping? |- |answers- |a |defalcation |in |which |a |cash |shortage |is |
concealed |by |applying |later |customer |remittances |to |a |receivable |account |from |which |money |was |
stolen
- |can |be |deterred |by |appropriate |segregation |of |duties |between |receiving |cash |and |posting |to |the |
accounts |receivable |ledger. |This |makes |it |more |difficult |for |the |employee |who |is |stealing |the |cash |to |
cover |it |up |through |inappropriate |remittance |credits.
,- |an |auditor |would |compare |the |date |the |checks |are |deposited |per |bank |statements |with |the |date |
remittance |credits |are |recorded |(not |by |reviewing |bank |transfers)
What |is |Kiting?
What |does |frequent |Kiting |result |in?
How |does |an |auditor |detect |Kiting? |- |answers- |concealing |a |cash |shortage |by |depositing |in |one |bank |
an |unrecorded |check |of |another |disbursement |bank, |effectively |recording |the |same |funds |in |both |
bank |accounts
- |Frequent |kiting |may |result |in |a |high |level |of |deposits |coupled |with |a |low |average |balance.
-An |auditor |would |most |likely |detect |kiting |by |reviewing |the |bank |transfer |schedule |and |following-up |
on |all |transfers |for |which |the |receipt |date |per |bank |is |recorded |in |the |accounting |period |before |the |
disbursement |date.
Relevant |assertions |for |auditing |cash |- |answerscompleteness, |valuation |and |allocation, |and |existence
Inventory |cycle |- |answerspurchases |and |sales |of |inv
Investment |cycle |- |answerspurchases |and |sales |of |stocks, |bonds, |and |derivative |instruments
Auditing |procedures |for |investments |- |answers-confirmation
-examination |of |securities |on |hand
-cutoff |testing
-review |of |board |minutes
-recalculation
Investments |should |be |measured |at |- |answersfair |value
Other |transaction |cycles: |PPE |- |answers-includes |all |tangible |assets |used |in |the |operation |of |a |
business |and |not |acquired |for |resale
-includes |purchases, |R&M, |depreciation, |disposal, |and |leasing
Other |transaction |cycles: |Payroll |and |personnel |cycle |- |answersrecord |keeping |of |employees |and |
calculation |and |authorization |of |payroll |disbursements
Completeness |assertion |for |PPE |- |answersselect |a |sample |of |fixed |asset |purchase |requisitions |and |
trace |to |receiving |reports |and |the |fixed |asset |subsidiary |ledger
Segregation |of |duties |for |payroll |- |answers-authorization: |operating |managers |and |personnel
-record |keeping: |payroll
-custody: |treasurer
Financing |cycle |- |answersincludes |all |debt |and |equity |transactions
, An |Entity's |Ability |to |Continue |as |a |Going |Concern |- |answersNon-issuer: |When |an |auditor |concludes |
that |substantial |doubt |remains |about |an |entity's |ability |to |continue |as |a |going |concern |the |auditor |
should |add |a |separate |section |to |the |auditors |report |with |the |heading |"substantial |doubt |about |the |
entity's |ability |to |continue |as |a |going |concern" |to |the |UM |opinion
Issuer: |When |an |auditor |concludes |that |substantial |doubt |remains |about |an |entity's |ability |to |
continue |as |a |going |concern |the |auditor |should |add |an |explanatory |paragraph |to |the |auditors |report |
with |the |heading |"substantial |doubt |about |the |entity's |ability |to |continue |as |a |going |concern" |to |the |
UQ |opinion
At |conclusion |of |fieldwork |the |auditor |is |required |to |- |answersobtain |a |management |representation |
letter |which |is |dated |the |same |date |as |the |audit |report
Managements |refusal |to |furnish |written |rep |results |in |- |answerseither |a |disclaimer |of |opinion |or |
withdrawal |from |the |engagement
For |FS |audit |of |a |non-issuer |SD |& |MW |- |answersmust |be |communicated |to |mngmt |and |those |charged
|with |governance |in |writing |within |60 |days |of |report |release |date
All |other |control |deficiencies |should |be |- |answerscommunicated |to |mngmt |only |either |orally |or |in |
writing |within |60 |days |of |report |release |date
Lien |- |answersa |right |to |keep |possession |of |property |belonging |to |another |person |until |a |debt |owed |
by |that |person |is |discharged.
What |is |the |completeness |assertion |testing? |- |answersa |transaction |occurring |in |the |period |has |been |
properly |recorded
The |authority |to |accept |incoming |goods |should |be |based |upon |an? |- |answersapproved |purchase |
order
The |primary |responsibility |of |a |bank |acting |as |a |registrar |of |capital |stock |is |to |- |answersverify |that |
stock |is |issued |in |accordance |with |authorization |of |BOD |and |articles |of |incorporation
Vouchers |payable |dept |- |answersresponsible |for:
-approving |vouchers |for |payment
-reconciling |the |vendor |invoice |with |related |receiving |report
Unrecorded |liability |- |answersexamine |receiving |report |for |items |received |before |YE |but |not |yet |
recorded
Search |for |unrecorded |payable |"out |of |period |search" |- |answerscompare |cash |payments |occurring |
after |BS |date |with |AP |TB |to |determine |that |disbursements |pertain |to |PY's |business |has |been |properly
|accrued
Examination |of |prospective |fs |with |no |reasonable |basis |is |what |opinion |type? |- |answersadverse
Report |on |AUP |includes |a? |- |answersdisclaimer |of |responsibility |for |sufficiency |of |those |procedures
