CPA Examination

CPA Examination In a financial statement audit of a nonissuer, an auditor would consider a judgmental misstatement to be a misstatement that - Correct Answer-B. Arises from a flaw in the accounting system. Inherent risk and control risk differ from detection risk in which of the following ways? - Correct Answer-B. Inherent risk and control risk exist independently of the audit. Based on past experience with a client, an auditor determined performance materiality for fixed assets should be calculated at 1/4 of total materiality (5% of total gross fixed assets). Calculate performance materiality based on the following: Fixed assets (gross) at 1/1/2017 $1,000,000 Capital expenditures 250,000 Dispositions 200,000 Accumulated depreciation at 1/1/2017 400,000 Accumulated depreciation at 12/31/2017 370,000 - Correct Answer-13125 Each of the following is a type of known misstatement, except - Correct Answer-D. Differences between management and the auditor's judgment regarding estimates. Upon discovering fraudulent data in a client's tax return that the client would not correct, a CPA withdraws from the engagement. How should the CPA respond if asked by the successor CPA why the relationship was terminated? - Correct Answer-D. "I suggest you get the client's permission for us to discuss all matters freely." In an audit of financial statements, an auditor's primary consideration regarding an internal control is whether the control - Correct Answer-A. Affects management's financial statement assertions