Auditing and Assurance Services CPA
Practice Questions & Answers
1.1) Spinner, CPA, had audited Lasco Corp.'s financial statements for the
past several years. Prior to the current year's engagement, a disagreement
arose that caused Lasco to change auditing firms. Lasco has demanded that
Spinner provide Lasco with Spinner's working papers so that Lasco may
show them to prospective auditors to help them prepare their bids for
Lasco's audit engagement. Spinner refused and Lasco commenced
litigation. Under the ethical standards of the profession, will Spinner be
successful in refusing to turn over the working papers?
A. Yes, because Spinner is the owner of the working papers
B. Yes, because Lasco is required to direct prospective auditors to contact
Spinner to make arrangements to view the working papers in Spinner's
office
C. No, because Lasco has a legitimate business reason for demanding
that Spinner surrender the working papers
D. No, because it was Lasco's financial statements tha:
Answer A. Yes, because Spinner is the owner of the working papers
2.2) Which of the following acts by a CPA is a violation of
professional standards regarding the confidentiality of client
information?
,A. Releasing financial information to a local bank with the approval of
the client's mail clerk
B. Allowing a review of professional practice without client authorization
C. Responding to an enforceable subpoena
D. Faxing a tax return to a loan officer at the request of the client:
Answer A. Releasing financial information to a local bank with the
approval of the client's mail clerk
3.3) In order for a firm to designate itself as "Members of the AICPA":
A all CPA owners must be members of the AICPA.
B. all owners, not just CPA owners, must be members of the AICPA.
C. the majority of CPA owners must be members of the AICPA.
D. the majority of all owners, not just CPA owners, must be members of the
AICPA
Answer A all CPA owners must be members of the AICPA.
4.4) In performing an attestation engagement, a CPA typically
A. supplies litigation support services.
B. assesses control risk at a low level.
C. expresses a conclusion about an assertion.
D. provides management consulting advice
Answer C. expresses a conclusion about an assertion.
5.5) A CPA who is not in public practice is obligated to follow which of
,the following rules of conduct?
A. Independence
B. Integrity and objectivity
C. Contingent fees
D. Commissions:
Answer B. Integrity and objectivity
6.6) Nile, CPA, on completing an audit, was asked by the client to provide
tech- nical assistance in integrating a new IT system. The set of
pronouncements designed to guide Nile in this engagement is the
Statement(s) on
A. Quality Control Standards.
B. Auditing Standards.
C. Standards for Accountants' IT Services.
D. Standards for Consulting Services
Answer D. Standards for Consulting Services.
7.7) An accountant is required to comply with the provisions of the
State- ments on Standards
for Accounting and Review Services (SSARS) when performing which of the
following tasks?
A. Preparing monthly journal entries
B. Providing the client with software to generate financial statements
C. Preparing financial statements of a nonissuer
, D. Providing a blank financial statement format or template:
Answer C. Preparing finan- cial statements of a nonissuer
8.8) In an audit of a nonprofit organization under the Uniform Guidance
rules, an auditor must comply with all of the following, except:
A. plan the testing of internal control over major programs to achieve a
low assessed level of control risk for the assertions relevant to the
compliance requirements for each major program.
B. compliance testing shall include tests of transactions and such other
auditing procedures necessary to provide the auditor sufficient evidence
to support an opinion on compliance for each major program.
C. correspond with all individuals or entities that have received or made
use of the federal award funds and determine the appropriateness of
such distributions.
D. follow up on prior audit findings
Answer C. correspond with all individuals or entities
that have received or made use of the federal award funds and determin
the appropriateness of such distributions.
9.9) The phrase "generally accepted accounting principles" is an
accounting term that:
A. includes broad guidelines of general application but not detailed
practices and procedures.
B. encompasses the conventions, rules, and procedures necessary to
Practice Questions & Answers
1.1) Spinner, CPA, had audited Lasco Corp.'s financial statements for the
past several years. Prior to the current year's engagement, a disagreement
arose that caused Lasco to change auditing firms. Lasco has demanded that
Spinner provide Lasco with Spinner's working papers so that Lasco may
show them to prospective auditors to help them prepare their bids for
Lasco's audit engagement. Spinner refused and Lasco commenced
litigation. Under the ethical standards of the profession, will Spinner be
successful in refusing to turn over the working papers?
A. Yes, because Spinner is the owner of the working papers
B. Yes, because Lasco is required to direct prospective auditors to contact
Spinner to make arrangements to view the working papers in Spinner's
office
C. No, because Lasco has a legitimate business reason for demanding
that Spinner surrender the working papers
D. No, because it was Lasco's financial statements tha:
Answer A. Yes, because Spinner is the owner of the working papers
2.2) Which of the following acts by a CPA is a violation of
professional standards regarding the confidentiality of client
information?
,A. Releasing financial information to a local bank with the approval of
the client's mail clerk
B. Allowing a review of professional practice without client authorization
C. Responding to an enforceable subpoena
D. Faxing a tax return to a loan officer at the request of the client:
Answer A. Releasing financial information to a local bank with the
approval of the client's mail clerk
3.3) In order for a firm to designate itself as "Members of the AICPA":
A all CPA owners must be members of the AICPA.
B. all owners, not just CPA owners, must be members of the AICPA.
C. the majority of CPA owners must be members of the AICPA.
D. the majority of all owners, not just CPA owners, must be members of the
AICPA
Answer A all CPA owners must be members of the AICPA.
4.4) In performing an attestation engagement, a CPA typically
A. supplies litigation support services.
B. assesses control risk at a low level.
C. expresses a conclusion about an assertion.
D. provides management consulting advice
Answer C. expresses a conclusion about an assertion.
5.5) A CPA who is not in public practice is obligated to follow which of
,the following rules of conduct?
A. Independence
B. Integrity and objectivity
C. Contingent fees
D. Commissions:
Answer B. Integrity and objectivity
6.6) Nile, CPA, on completing an audit, was asked by the client to provide
tech- nical assistance in integrating a new IT system. The set of
pronouncements designed to guide Nile in this engagement is the
Statement(s) on
A. Quality Control Standards.
B. Auditing Standards.
C. Standards for Accountants' IT Services.
D. Standards for Consulting Services
Answer D. Standards for Consulting Services.
7.7) An accountant is required to comply with the provisions of the
State- ments on Standards
for Accounting and Review Services (SSARS) when performing which of the
following tasks?
A. Preparing monthly journal entries
B. Providing the client with software to generate financial statements
C. Preparing financial statements of a nonissuer
, D. Providing a blank financial statement format or template:
Answer C. Preparing finan- cial statements of a nonissuer
8.8) In an audit of a nonprofit organization under the Uniform Guidance
rules, an auditor must comply with all of the following, except:
A. plan the testing of internal control over major programs to achieve a
low assessed level of control risk for the assertions relevant to the
compliance requirements for each major program.
B. compliance testing shall include tests of transactions and such other
auditing procedures necessary to provide the auditor sufficient evidence
to support an opinion on compliance for each major program.
C. correspond with all individuals or entities that have received or made
use of the federal award funds and determine the appropriateness of
such distributions.
D. follow up on prior audit findings
Answer C. correspond with all individuals or entities
that have received or made use of the federal award funds and determin
the appropriateness of such distributions.
9.9) The phrase "generally accepted accounting principles" is an
accounting term that:
A. includes broad guidelines of general application but not detailed
practices and procedures.
B. encompasses the conventions, rules, and procedures necessary to
