Audit Reports - CPA Auditing and Attestation (AUD)
Card 1 of 96
A registered CPA auditing firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by:
A registered CPA auditing firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by:
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Quality control standards relate to the conduct of a firm's audit practice. They set forth standards for establishing policies and procedures to provide reasonable assurance in conforming with standards.
Quality control standards relate to the conduct of a firm's audit practice. They set forth standards for establishing policies and procedures to provide reasonable assurance in conforming with standards.
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Of the following elements, which is not an element of a CPA firm's quality control policies and procedures?
Of the following elements, which is not an element of a CPA firm's quality control policies and procedures?
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In addition to HR, leadership responsibilities and monitoring, Engagement Acceptance and Continuance, Performance of the Engagement, and Ethical requirements are included as quality control elements.
In addition to HR, leadership responsibilities and monitoring, Engagement Acceptance and Continuance, Performance of the Engagement, and Ethical requirements are included as quality control elements.
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In the process of evaluating whether or not an accounting change by a company is acceptable, an auditor should consider if:
In the process of evaluating whether or not an accounting change by a company is acceptable, an auditor should consider if:
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If there is an accounting principle change by a company, it should be justifiable, for a reason, and it should obey any laws and reporting regulations.
If there is an accounting principle change by a company, it should be justifiable, for a reason, and it should obey any laws and reporting regulations.
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A “proof of cash”
A “proof of cash”
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A proof of cash is an audit technique designed to roll forward each line of the bank reconciliation from one period to the next. The beginning balance of the bank is compared to the beginning balance of the book and the receipts and disbursements are traced to the ending balances.
A proof of cash is an audit technique designed to roll forward each line of the bank reconciliation from one period to the next. The beginning balance of the bank is compared to the beginning balance of the book and the receipts and disbursements are traced to the ending balances.
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When an auditor requires verification of material accounts receivable balances, they would most likely:
When an auditor requires verification of material accounts receivable balances, they would most likely:
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A “positive confirmation” requires the recipient to respond affirmatively to the auditor regarding the account balance. The positive confirmation is used to confirm material amounts.
A “positive confirmation” requires the recipient to respond affirmatively to the auditor regarding the account balance. The positive confirmation is used to confirm material amounts.
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When no response is received from a positive confirmation the auditor should:
When no response is received from a positive confirmation the auditor should:
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A “positive confirmation” requires an affirmative response. If during the course of an audit a “positive confirmation” is not received, it is incumbent upon the auditor to follow up on outstanding confirmations, resending the confirmation if no response is received.
A “positive confirmation” requires an affirmative response. If during the course of an audit a “positive confirmation” is not received, it is incumbent upon the auditor to follow up on outstanding confirmations, resending the confirmation if no response is received.
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Of the following elements, which is applicable to a CPA firm's quality control policy and procedures in an audit practice?
Of the following elements, which is applicable to a CPA firm's quality control policy and procedures in an audit practice?
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Performance of the engagement is one of the 6 interrelated elements of quality control.
Performance of the engagement is one of the 6 interrelated elements of quality control.
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A basic objective of a CPA firm is to provide professional services that conform to professional standards. Reasonable assurance of achieving this basic objective is provided through:
A basic objective of a CPA firm is to provide professional services that conform to professional standards. Reasonable assurance of achieving this basic objective is provided through:
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A system of quality control establishes policies and procedures that provide reasonable assurance of conforming with professional standards.
A system of quality control establishes policies and procedures that provide reasonable assurance of conforming with professional standards.
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Of the following, which is not an instance to use an Emphasis of Matter paragraph?
Of the following, which is not an instance to use an Emphasis of Matter paragraph?
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The only other time to use this paragraph would be when subsequent events lead to a change in the audit opinion.
The only other time to use this paragraph would be when subsequent events lead to a change in the audit opinion.
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Which statement is true regarding a compilation report?
Which statement is true regarding a compilation report?
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AR-C Section 60 of the identifies “General Principles for Engagements Performed in Accordance with Statements on Standards for Accounting and Review Services. Compilation Engagements are required to comply with this section.
AR-C Section 60 of the identifies “General Principles for Engagements Performed in Accordance with Statements on Standards for Accounting and Review Services. Compilation Engagements are required to comply with this section.
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Alfa Inc. operates a chain of restaurants in highly populated tourist destinations in the southern United States. Because of recent events, beyond the control of management, it is likely that Alfa will not survive the year. The auditors should report Alfas situation as
Alfa Inc. operates a chain of restaurants in highly populated tourist destinations in the southern United States. Because of recent events, beyond the control of management, it is likely that Alfa will not survive the year. The auditors should report Alfas situation as
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An emphasis of matter paragraph is used to support the auditor’s judgment concerning an event that needs to be highlighted. An emphasis of matter paragraph is required when the auditor has doubts about the entity's ongoing concern.
An emphasis of matter paragraph is used to support the auditor’s judgment concerning an event that needs to be highlighted. An emphasis of matter paragraph is required when the auditor has doubts about the entity's ongoing concern.
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In the course of auditing Litmus, Inc., the auditors have uncovered a scheme by management to overvalue inventory in order to adhere to bond covenants. The firm approached management and indicated the practice would stop; however, they did not want to correct this year’s financial statements. The auditor should:
In the course of auditing Litmus, Inc., the auditors have uncovered a scheme by management to overvalue inventory in order to adhere to bond covenants. The firm approached management and indicated the practice would stop; however, they did not want to correct this year’s financial statements. The auditor should:
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According to AU-C Section 75: “ The auditor should express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.”
According to AU-C Section 75: “ The auditor should express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.”
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In the formation of a financial statement opinion, the auditor would least likely evaluate whether:
In the formation of a financial statement opinion, the auditor would least likely evaluate whether:
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When forming an audit opinion of financial statements, the auditor is least likely to evaluate whether earnings forecasts made by investors are met.
When forming an audit opinion of financial statements, the auditor is least likely to evaluate whether earnings forecasts made by investors are met.
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Of the following factors, which should most influence an auditor’s decision to modify the audit opinion of an issuer’s financial statements?
Of the following factors, which should most influence an auditor’s decision to modify the audit opinion of an issuer’s financial statements?
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The effect of a misstatement on the financial statements taken as a whole should most likely influence an auditor’s decision to modify the audit opinion.
The effect of a misstatement on the financial statements taken as a whole should most likely influence an auditor’s decision to modify the audit opinion.
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John Ryan, CPA needs to research guidance for the engagement of his client. The client is a private unaudited non-issuer and wants a compilation completed. In which of the following sections of various literature sources would John find relevant guidance?
John Ryan, CPA needs to research guidance for the engagement of his client. The client is a private unaudited non-issuer and wants a compilation completed. In which of the following sections of various literature sources would John find relevant guidance?
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AR-C is a section of the AICPA's guidance on SSARS. As this engagement is a compilation for an unaudited non-issuer, it would be considered SSARS.
AR-C is a section of the AICPA's guidance on SSARS. As this engagement is a compilation for an unaudited non-issuer, it would be considered SSARS.
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Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by:
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Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
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The following roles fall under the FROR:
The following roles fall under the FROR:
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The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
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John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
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Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
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Of the following, which provides the most authoritative guidance for an audit of an issuer?
Of the following, which provides the most authoritative guidance for an audit of an issuer?
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General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
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An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
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The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
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