CPA Auditing and Attestation (AUD) : Audit Engagements-Auditors

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Example Questions

Example Question #1 : Audit Engagements Auditors

In auditing “professional skepticism” requires:

Possible Answers:

Distrust of management

Disbelief of audit evidence.

Proof of every transactions

Critical assessment of audit evidence

Correct answer:

Critical assessment of audit evidence

Explanation:

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:

Possible Answers:

A low level of assurance

Assurance that satisfies management

An adequate level of assurance

A high level of assurance

Correct answer:

A high level of assurance

Explanation:

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

Possible Answers:

suspension of judgment

minimum judgement

prejudging outcomes

an open mind

Correct answer:

an open mind

Explanation:

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:

Possible Answers:

Joining professional societies that enforce ethical conduct

Abiding by GAAS

Having an attitude of independence with regard to engagements

Maintaining an appropriate system of quality control

Correct answer:

Maintaining an appropriate system of quality control

Explanation:

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?

Possible Answers:

Monitoring

Leadership responsibilities

Compensation checkpoints

Human resources

Correct answer:

Compensation checkpoints

Explanation:

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:

Possible Answers:

The company CEO is in favor of the change

The new accounting principle obeys the proper financial reporting framework

The company's employees are in favor of the change

The shareholders of the company are in favor of the change

Correct answer:

The new accounting principle obeys the proper financial reporting framework

Explanation:

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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