Auditing and Assurance services CPA practice
EXAM QUESTIONS AND VERIFIED CORRECT
ANSWERS LATEST 2026-2027 NEW VERSION
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) 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) 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) 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) 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) Nile, CPA, on completing an audit, was asked by the client to provide technical
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) An accountant is required to comply with the provisions of the Statements 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
financial statements of a nonissuer
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 determine
the appropriateness of such distributions.
, -
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 define
accepted accounting practice at a particular time.
C. provides a measure of conventions, rules, and procedures governed by the AICPA.
D. is included in the audit report to indicate that the audit has been conducted in
accordance with generally accepted auditing standards (GAAS). - answer>>>B.
encompasses the conventions, rules, and procedures necessary to define accepted
accounting practice at a particular time.
10) A CPA is permitted to disclose confidential client information without the
consent of the client to:
I. another CPA who has purchased the CPA's tax practice.
II. another CPA firm if the information concerns suspected tax return irregularities.
III. a state CPA society voluntary quality control review board.
A. I and III only
B. II and III only
C. II only
D. III only - answer>>>D. III only
11) What is the definition of fraud in an audit of financial statements?
A. An intentional act that results in a material misstatement in financial statements
that are the subject of an audit
EXAM QUESTIONS AND VERIFIED CORRECT
ANSWERS LATEST 2026-2027 NEW VERSION
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) 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) 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) 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) 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) Nile, CPA, on completing an audit, was asked by the client to provide technical
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) An accountant is required to comply with the provisions of the Statements 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
financial statements of a nonissuer
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 determine
the appropriateness of such distributions.
, -
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 define
accepted accounting practice at a particular time.
C. provides a measure of conventions, rules, and procedures governed by the AICPA.
D. is included in the audit report to indicate that the audit has been conducted in
accordance with generally accepted auditing standards (GAAS). - answer>>>B.
encompasses the conventions, rules, and procedures necessary to define accepted
accounting practice at a particular time.
10) A CPA is permitted to disclose confidential client information without the
consent of the client to:
I. another CPA who has purchased the CPA's tax practice.
II. another CPA firm if the information concerns suspected tax return irregularities.
III. a state CPA society voluntary quality control review board.
A. I and III only
B. II and III only
C. II only
D. III only - answer>>>D. III only
11) What is the definition of fraud in an audit of financial statements?
A. An intentional act that results in a material misstatement in financial statements
that are the subject of an audit
