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CPA EXAM - AUD - MULTIPLE CHOICE QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPA EXAM - AUD - MULTIPLE CHOICE QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPA EXAM - AUD - MULTIPLE CHOICEQUESTIONS AND ANSWERS WITH
SOLUTIONS 2024
Which of the following represents an appropriate overall response to an increase in financial statement
level risk?
a. Changing the general approach of the audit to ensure control testing of all significant accounts.
b. Providing management with more specific details about audit sampling procedures.
c. Shifting substantive procedures to interim.
d. Increasing the level of supervision. - ANSWER d. Increasing the level of supervision.
Using a combined approach with most likely involve:
a. Changing the timing of substantive tests by omitting interim-date testing and performing the tests at
year-end.
b. Reducing inherent risk for most of the assertions relevant to significant account balances.
c. Identifying specific internal controls relevant to specific assertions.
d. Performing more extensive substantive tests with later sample sizes than originally planned. - ANSWER
c. Identifying specific internal controls relevant to specific assertions.
Which of the following auditor concerns most likely would be so serious that the auditor would conclude
that a financial statement audit CANNOT be performed?
a. Management has imposed a restriction that the auditor believes will result in a qualified opinion.
,b. A portion of supporting evidence stored at an offsite storage facility was destroyed by a hurricane.
c. The CPA lacks experience in the client's operations and industry.
d. There is substantial risk of management intentionally manipulating accounting records. - ANSWER d.
There is substantial risk of management intentionally manipulating accounting records.
Before accepting a new client engagement, an auditor should:
a. Evaluate management's integrity through review of the management representation letter.
b. Assess the auditor's ability to appropriately staff the potential engagement.
c. Establish an understanding with the potential client as to a preliminary measure of materiality.
d. Contact the predecessor auditor and arrange to review the audit files from the previous year's audit. -
ANSWER b. Assess the auditor's ability to appropriately staff the potential engagement.
Which of the following statements is correct about an auditor's required communication with those
charged with governance?
a. The auditor should not communicate frequently recurring misstatements unless they are material.
b. Any matters communicated to those charged with governance also are required to be communicated
to the entity's management.
c. Disagreements with management about the application of accounting principles must be
communicated in writing to those charged with governance.
,d. The auditor is required to inform those charged with governance about significant misstatements
discovered by the auditor and subsequently corrected by management. - ANSWER d. The auditor is
required to inform those charged with governance about significant misstatements discovered by the
auditor and subsequently corrected by management.
Which of the following items are included in the auditor's communication to those charged with
governance and in management's representation letter to the auditor?
I. The auditor's responsibility under generally accepted auditing standards.
II. Management's responsibility for fair presentation of the financial statements in conformity with
generally accepted accounting principles.
III. Uncorrected, nontrivial misstatements identified by the auditor.
Auditor's Comm. to Governance vs. Mgmt Rep Letter
a. I & III only vs. II & III only
b. I only vs. II only
c. I, II, & III vs. I & II only
d. I & II only vs. I, II, & III - ANSWER a. I & III only vs. II & III only
U.S. GAAS do NOT require a written communication to those charged with governance to include:
a. The adequacy of the financial statement disclosures.
b. An overview of the planned scope and timing of the audit.
c. Disagreements with management, whether resolved or not.
d. Significant difficulties encountered in performing the audit. - ANSWER b. An overview of the planned
scope and timing of the audit.
* may be in writing or orally communicated.
, According to professional standards, audit documentation should:
a. Include a flowchart to show the design and implementation of internal control.
b. Show who performed the work and the date the work was completed.
c. Be prepared in enough detail so that a new staff auditor who has no previous connection with the
audit can understand the conclusions reached and any significant judgments made to reach those
conclusions.
d. Monitor the effectiveness of the CPA firm's quality control activities. - ANSWER b. Show who
performed the work and the date the work was completed.
According to PCAOB standards, audit documentation must be retained for:
a. Three years.
b. Seven years.
c. One year.
d. Five years. - ANSWER b. Seven years.
Audit documentation serves mainly to:
a. Document the level of independence maintained by the auditor.
b. Satisfy the auditor's responsibilities concerning the Code of Professional conduct.
c. Monitor the effectiveness of the CPA firm's quality control activities.
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