CPA Auditing and Attestation (AUD) : Audit Engagements-Auditors
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : Audit Engagements Auditors
In auditing “professional skepticism” requires:
Critical assessment of audit evidence
Proof of every transactions
Disbelief of audit evidence.
Distrust of management
Critical assessment of audit evidence
As stated in PCAOB; AS 1015: “Due professional care requires the auditor to exercise professional skepticism. Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence.”
Example Question #2 : Audit Engagements Auditors
Reasonable assurance is:
A low level of assurance
Assurance that satisfies management
A high level of assurance
An adequate level of assurance
A high level of assurance
Reasonable assurance is defined as a high level of assurance that the financial statements are free of material misstatement. This level of assurance is not absolute.
Example Question #3 : Audit Engagements Auditors
The six traits of professional skepticism include
minimum judgement
an open mind
prejudging outcomes
suspension of judgment
an open mind
One of the six traits of professional skepticism requires maintaining an “open mind”. This is also commonly referred to as a “questioning mind”. The avoidance of prejudging outcomes is inherent in the qualitative factors of an “open mind”.
Example Question #4 : Audit Engagements Auditors
A registered CPA auditing firm would be reasonably assured of meeting its responsibility to provide services that conform with professional standards by:
Maintaining an appropriate system of quality control
Having an attitude of independence with regard to engagements
Abiding by GAAS
Joining professional societies that enforce ethical conduct
Maintaining an appropriate system of quality control
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.
Example Question #5 : Audit Engagements Auditors
Of the following elements, which is not an element of a CPA firm's quality control policies and procedures?
Human resources
Monitoring
Compensation checkpoints
Leadership responsibilities
Compensation checkpoints
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.
Example Question #6 : Audit Engagements Auditors
In the process of evaluating whether or not an accounting change by a company is acceptable, an auditor should consider if:
The shareholders of the company are in favor of the change
The new accounting principle obeys the proper financial reporting framework
The company CEO is in favor of the change
The company's employees are in favor of the change
The new accounting principle obeys the proper financial reporting framework
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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