CPA Auditing and Attestation (AUD) : CPA Auditing and Attestation (AUD)
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #5 : Types Of Engagements Ssars
GAS require a written report on internal control:
In every audit
Either orally or in writing
Only when there are reportable conditions that are significant enough to be material weaknesses
Only when there are reportable conditions
In every audit
GAS requires a written report on every audit of internal control.
Example Question #6 : Types Of Engagements Ssars
Of the followin SSARS engagements, which requires limited assurance rather than no assurance?
Preparation
All require limited assurance
Compilation
Review
Review
Of the options, preparation and compilation require no assurance whereas review engagements require limited assurance.
Example Question #4 : Integrated Audits & Attestation Engagements
An agreed-upon procedure report is:
Reports the findings of the agreed upon procedures to management
Required to follow IFRS guidelines
Presented in accordance with GAAP
Is a required report mandated by the SEC
Reports the findings of the agreed upon procedures to management
An agreed-upon procedure engagement performs specific procedures on a subject matter. These procedures are specified in a contract, by law, or under agreement with management with the auditor reporting on the findings.
Example Question #5 : Integrated Audits & Attestation Engagements
As a pre-condition to an agreed-upon procedure engagement.
The auditor may agree upon the conclusions of the report with management
The auditor may agree upon the conclusion of the report with regulators
The auditor is required to be independent
The auditor is not required to be independent
The auditor is required to be independent
As described in section AT 201, a practitioner may accept an agreed-upon procedure engagement “that the practitioner is independent”.
Example Question #6 : Integrated Audits & Attestation Engagements
According to SSAE 18: The auditor should “establish an understanding with the engaging party regarding the nature of the engagement, including the following":
Whether the report is restricted to use
The intended purpose of the engagement
All of the answer choices are correct
Whether the engagement is pursuant to any law regulation or contract
Whether the report is restricted to use
According to SSAE 18, the practitioner should establish an understanding as to whether there are any restrictions to use. Additionally, the practitioner should establish the purpose of the report and whether the report is pursuant to a law, regulation, or contract.
Example Question #7 : Integrated Audits & Attestation Engagements
Of the following standards, which should a CPA firm apply in a review of pro forma financial information?
SSARS
Statements on Standards for Consulting Services
SSAE
GAAS
SSAE
A CPA should refer to SSAE for a review of pro forma financial information.
Example Question #131 : Cpa Auditing And Attestation (Aud)
Of the following, which would not be considered an attest engagement subject to attestation standards?
An engagement to review pro forma financial statements
An engagement to examine management's assertion about a subject matter
An engagement to examine a financial forecast
An engagement to review the financial statements of a nonpublic company
An engagement to review the financial statements of a nonpublic company
Attest engagements covered under SSAE exclude services performed in accordance with SSARS. Since the review of a nonpublic company's financial statements is conducted under SSARS, it is not subject to attestation standards.
Example Question #132 : Cpa Auditing And Attestation (Aud)
Attestation risk is comprised of all of the following risks except for:
Detection risk
Financial risk
Control risk
Inherent risk
Financial risk
Inherent, control, and detection risks are all components of attestation risk whereas financial risk is not a risk-focused on.
Example Question #133 : Cpa Auditing And Attestation (Aud)
A physical inventory is taken on a “cut-off date”. This procedure is necessary to ensure.
authorization
reasonableness
completeness
ownership
completeness
Taking a physical inventory at a cut-off date ensures that all of the inventory that is appropriate to be reported will be included in the financial statements. The auditor sets the cut-off date and traces the amount to the accounting records to ensure that the records include all the inventory.
Example Question #134 : Cpa Auditing And Attestation (Aud)
A ___________ inventory system is best used for high dollar items
perpetual
concurrent
periodic
recurring
perpetual
A perpetual inventory provides a real time record of inventory values. Items purchased are recorded to the inventory account at the time of purchase. High dollar inventory items are particularly important to properly value the inventory account.
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