CPA AUD
Which of the following standards-setting bodies has the authority to issue auditing standards
for financial statement audits ✔✔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 ✔✔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 ✔✔Audit of year 2 and examination of year 4
After an audit the financial statements are the responsibility of ✔✔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 ✔✔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
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 ✔✔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 ✔✔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
✔✔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 ✔✔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 ✔✔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 ✔✔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 ✔✔the integrity of management and disagreements with
management
CPA should decide not to accept a new client for an audit engagement if ✔✔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
✔✔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 ✔✔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 ✔✔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 ✔✔engagement letter should
state management is responsible for the financial statements. management is responsible for
compliance and management is responsible for internal control
the following is correct regarding the auditor's preliminary judgement about materiality
✔✔the auditor makes a preliminary judgement about materiality in the planning stage of the
audit based on annualized interim financial statements
procedures an auditor preforms in planning a financial statement audit ✔✔coordinating the
assistance of entity personnel in data preparation is usually performed during planning stage.
the auditor generally would read current years interim financial statements.
Which of the following standards-setting bodies has the authority to issue auditing standards
for financial statement audits ✔✔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 ✔✔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 ✔✔Audit of year 2 and examination of year 4
After an audit the financial statements are the responsibility of ✔✔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 ✔✔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
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 ✔✔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 ✔✔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
✔✔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 ✔✔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 ✔✔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 ✔✔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 ✔✔the integrity of management and disagreements with
management
CPA should decide not to accept a new client for an audit engagement if ✔✔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
✔✔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 ✔✔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 ✔✔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 ✔✔engagement letter should
state management is responsible for the financial statements. management is responsible for
compliance and management is responsible for internal control
the following is correct regarding the auditor's preliminary judgement about materiality
✔✔the auditor makes a preliminary judgement about materiality in the planning stage of the
audit based on annualized interim financial statements
procedures an auditor preforms in planning a financial statement audit ✔✔coordinating the
assistance of entity personnel in data preparation is usually performed during planning stage.
the auditor generally would read current years interim financial statements.
