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CPA AUD Questions with Detailed Verified
Answers
Which of the following standards-setting bodies has the authority to issue auditing
standards for financial statement audits
Ans: Auditing and standards board not the PCOB
Whenever an independent expert is brought in to examine financial statements with
the hopes of adding credibility that engagement and reporting process id known as an
Ans: Attestation NOT an Audit nothing in the question refers to an audit
A CPA performed the following engagements in February of year 3. which is
considered an attestation engagement
Ans: Audit of year 2 and examination of year 4
After an audit the financial statements are the responsibility of
Ans: the management of the reporting company
According to the generally accepted auditing reporting standards which of the
following must be expressed in a standard auditor's report
Ans: in a standard report the fact that the client disclosures and footnotes are
adequate need not to be reported and the consistent accounting principles does not
apply
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Laura is a covered member in an audit engagement which of the following cannot
work in any capacity for a company being audited by Laura
Ans: spouse and dependent childe of the covered member can work for the company
as long as there is no influence on the financial statements
regarding a covered member of an audit engagement
Ans: would not be allowed if a dependent child owns stock in the audit client even if
the child was under the age of five. no financial holding is allowed unless it is indirect
like a mutual fund
a violation of the profession's independence standards most likely would have
occurred when
Ans: CPA issued a second year audit without collecting the first year's payment
In an audit of financial statements of a non-issuer in accordance Generally accepted
auditing standards an auditor is required to
Ans: Document the auditors understanding of the entity's internal control structure.
NOT preform test of controls to evaluate effectiveness of the entity;s accounting
system(only need for Publicly traded companies)
the following attestation engagements does a CPA gather evidence and then provide
an opinion regarding fair presentation of financial information
Ans: examination of forward-looking financial information and audits of historic
financial information
the following should be considered by a CPA prior to acceptance of an audit
engagement of a non issuer
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Ans: The quality of the accounting records and the future plans of the company
Inquires of the predecessor auditor prior to acceptance of the engagement should
include specific questions regarding
Ans: the integrity of management and disagreements with management
CPA should decide not to accept a new client for an audit engagement if
Ans: neither 1. the CPA lacks understanding of the client's industry and 2. the clients
management had unusually high turnover
this procedure an auditor likely perform in the planning stage of a financial statement
audit
Ans: obtaining a sign engagement letter from the client's management. examining
documents is done in the investigation stage
the proceedures are likely to be performed in the planning stage of an audit
Ans: determining the extent of involvement of specialists and internal auditors
all of the following are correct regarding an auditor's understanding with a potential
client prior to beginning an audit
Ans: should cover responsibilities of the independent auditor. understanding should
cover the limitations of the engagement. and should list the audit fees and billing
terms. NOT understanding should be in the form of an engagement letter in order to be
in conformity with auditing standards
management responsibilities on the engagement letter include
© Get it right 2025 Getaway - Stuvia US All rights reserved
CPA AUD Questions with Detailed Verified
Answers
Which of the following standards-setting bodies has the authority to issue auditing
standards for financial statement audits
Ans: Auditing and standards board not the PCOB
Whenever an independent expert is brought in to examine financial statements with
the hopes of adding credibility that engagement and reporting process id known as an
Ans: Attestation NOT an Audit nothing in the question refers to an audit
A CPA performed the following engagements in February of year 3. which is
considered an attestation engagement
Ans: Audit of year 2 and examination of year 4
After an audit the financial statements are the responsibility of
Ans: the management of the reporting company
According to the generally accepted auditing reporting standards which of the
following must be expressed in a standard auditor's report
Ans: in a standard report the fact that the client disclosures and footnotes are
adequate need not to be reported and the consistent accounting principles does not
apply
© Get it right 2025 Getaway - Stuvia US All rights reserved
,Click here for more: Scholars nexus
Laura is a covered member in an audit engagement which of the following cannot
work in any capacity for a company being audited by Laura
Ans: spouse and dependent childe of the covered member can work for the company
as long as there is no influence on the financial statements
regarding a covered member of an audit engagement
Ans: would not be allowed if a dependent child owns stock in the audit client even if
the child was under the age of five. no financial holding is allowed unless it is indirect
like a mutual fund
a violation of the profession's independence standards most likely would have
occurred when
Ans: CPA issued a second year audit without collecting the first year's payment
In an audit of financial statements of a non-issuer in accordance Generally accepted
auditing standards an auditor is required to
Ans: Document the auditors understanding of the entity's internal control structure.
NOT preform test of controls to evaluate effectiveness of the entity;s accounting
system(only need for Publicly traded companies)
the following attestation engagements does a CPA gather evidence and then provide
an opinion regarding fair presentation of financial information
Ans: examination of forward-looking financial information and audits of historic
financial information
the following should be considered by a CPA prior to acceptance of an audit
engagement of a non issuer
© Get it right 2025 Getaway - Stuvia US All rights reserved
, Click here for more: Scholars nexus
Ans: The quality of the accounting records and the future plans of the company
Inquires of the predecessor auditor prior to acceptance of the engagement should
include specific questions regarding
Ans: the integrity of management and disagreements with management
CPA should decide not to accept a new client for an audit engagement if
Ans: neither 1. the CPA lacks understanding of the client's industry and 2. the clients
management had unusually high turnover
this procedure an auditor likely perform in the planning stage of a financial statement
audit
Ans: obtaining a sign engagement letter from the client's management. examining
documents is done in the investigation stage
the proceedures are likely to be performed in the planning stage of an audit
Ans: determining the extent of involvement of specialists and internal auditors
all of the following are correct regarding an auditor's understanding with a potential
client prior to beginning an audit
Ans: should cover responsibilities of the independent auditor. understanding should
cover the limitations of the engagement. and should list the audit fees and billing
terms. NOT understanding should be in the form of an engagement letter in order to be
in conformity with auditing standards
management responsibilities on the engagement letter include
© Get it right 2025 Getaway - Stuvia US All rights reserved
