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Audit CPA Exam Questions and answers, 100% Accurate. Graded A+
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Audit CPA Exam Questions and answers, 100% Accurate. Graded A+ Management is responsible for - -Financial statements - the preparation and fair presentation Internal controls - design, implementation and maintenance relevant to the FS Providing auditor with access to info and persons nee...

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  • August 10, 2023
  • 32
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

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Audit CPA Exam Questions and
answers, 100% Accurate. Graded A+

Management is responsible for - ✔✔-Financial statements - the preparation and fair presentation



Internal controls - design, implementation and maintenance relevant to the FS



Providing auditor with access to info and persons needed to complete the audit



The preparation and fair presentation of the FS requires - ✔✔-identification of the applicable financial
reporting framework



preparation and fair presentation in accordance with framework



inclusion of adequate description of the framework



to obtain reasonable assurance - ✔✔-plan the work and properly supervise the assistants



determine and apply appropriate materiality levels



identify and assess risks of material misstatement, whether due to error or fraud



and obtain sufficient appropriate audit evidence



The applicable financial reporting framework - ✔✔-The financial reporting framework that is acceptable
in view of the nature of the entity and the objective of the financial statements



Includes general purpose: designed to meet needs of a wide range of users (GAAP & IFRS)

,and special purpose frameworks



Fair presentation frameworks - ✔✔-All financial reporting frameworks in the US are fair presentation
frameworks



Acknowledges explicity or implicitly that to achieve fair presentation of the FS, it may be necessary for
management to provide disclosures beyond those specifically required



Acknowledges explicitly that it may be necessary for mgmt (RARE) to depart from a requirement to
achieve fair presentation



Auditing standards - ✔✔-(GAAS) Generally accepted auditing standards - mandatory on all audit
engagements



(GAGAS) Generally accepted government auditing standards - audits of government organizations,
programs or activities that receive government funds



(PCAOB) - established pursuant to SOX - establish auditing standards for issuers



(ISA) International standards of auditing



The term "must" or "is required" - ✔✔-indicates an unconditional requirement



must be followed in all cases



The term "should" - ✔✔-presumptively mandatory requirement



must be followed in all cases where the requirement is relevant but allows for departures in rare
circumstances if there is appropriate justification



Conditions that indicate possible fraud - ✔✔-Pressure

,Opportunity

Rationalization



If there is substantial doubt about going concern, the auditor should: - ✔✔-consider the adequacy of the
disclosure about the entity's possible inability to continue as a going concern



include an emphasis of matter paragraph in the auditors report to reflect this conclusion



Going concern documentation - ✔✔-Conditions or events that gave rise to the concern



Any mitigating factors the auditor finds significant



Audit work performed to evaluate mgmt plans



Conclusion about whether it remains or is alleviated



The effect on the financial statements and disclosures



Mitigating factors - ✔✔-when an auditors believe there is substantial doubt about going concern, the
auditor is required to consider MANAGEMENTS PLAN FOR DEALING WITH the conditions or events that
led to the auditors belief



-Plan to borrow money or restructure debt

-Plan to sell assets

-Plan to delay or reduce expenditures

-Plan to increase ownership equity



Must have BOTH intent and ability



No audit work can be done - ✔✔-NO AUDIT OPINION

, not even a bad opinion



Subsequent discovery of facts after report release date: If client refuses to follow procedures



"DAR" them to fix it - ✔✔-Disassociate



Alert regulatory agencies



Relying parties



If there is a material inconsistency in documents containing audited financial statements - ✔✔-The
auditor should determine whether the audited financial statements or the other info needs to be
revised



If the FS requires revision and management refuses then they should modify the opinion



If the other info requires revision then they should communicate this to those charged with governance
and include this in the auditors report in an other-matter paragraph or withhold use of the report or
withdraw from engagement



Supplementary info report for nonissuers AND the opinion if one - ✔✔-Could be an other-matter
paragraph in audit report OR



separate report - should reference the auditors report and opinion on the FS



Can have unmodified FS and qualified or adverse on supplementary if misstatements

If qualified opinion on FS then qualified for supplementary should

If adverse or disclaimer on FS, then no opinion should be expressed on supplementary

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