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 #11 : Performing Further Procedures
During the course of the audit, the auditor uncovers a serious misappropriation of cash attributed to the senior accountant. This is required to be communicated to
IRS
police
management
audit committee
audit committee
The audit committee is the appropriate group as it is a representative of governance. Governance communication is established in AU section 380.
Example Question #12 : Performing Further Procedures
“Significant Difficulties” encountered through an audit that should be communicated to governance include:
Restrictions imposed on the auditor
All of the answer choices are correct.
The unavailability of expected information
Significant delays in management providing information
All of the answer choices are correct.
AU Section 380 identifies specific instances of communication. The instances included for communication to the government are significant delays, unavailability of information, and restrictions placed on auditors.
Example Question #1 : Communication With Management
According to AU 380, the auditor must communicate to those charged with governance all items related to the audit except those that:
Neither A and B
Both A and B
The auditor's judgment deems them immaterial
Are restricted by law
Both A and B
Auditors must communicate all items to governance except those that the auditors in their professional judgment deem immaterial. Auditors may also be restricted by law in their communication with governance.
Example Question #13 : Performing Further Procedures
An auditor's communication with those charged with governance is required to include the:
Justification for the auditor's selection of sampling methods
Discussion of disagreements with management about matters that significantly impact the financial statements
Basis for the auditor's preliminary judgement about materiality
Assessment of the quality of the entity's earnings as compared to the previous year
Discussion of disagreements with management about matters that significantly impact the financial statements
The auditor should discuss with those charged with governance any significant disagreements with management, whether or not satisfactorily resolved, about matters that are significant to the financial statements or to the auditor's report.
Example Question #2 : Communication With Management
An auditor's communication of internal control related matters noted in an audit usually should be addressed to:
The chief accounting officer
Management and those charged with governance
The director of internal auditing
The chief financial officer
Management and those charged with governance
An auditor's communication of internal control related matters noted in an audit usually should be addressed to management and those charged with governance.
Example Question #3 : Communication With Management
An auditor should communicate a deficiency to a non-issuer client's management only either orally or in writing when there is a:
None of the answer choices are correct
Control deficiency
Material weakness
Significant deficiency
Control deficiency
Communication of deficiencies in internal control varies on reporting to management. Significant deficiencies and material weaknesses for example need to be communicated in writing.
Example Question #1 : Quality Control, Engagement Acceptance, Planning, & Internal Control
Auditors document the terms of engagement in:
Engagement Letter
Auditors Planning Letter
Comfort Letter
Management Representation Letter
Engagement Letter
An engagement letter outlines the terms of the engagement including management's expected responsibilities and the responsibilities of the auditor.
Example Question #2 : Quality Control, Engagement Acceptance, Planning, & Internal Control
A properly developed engagement letter should include:
The auditors’ responsibilities
Management responsibilities
Discussion of inherent limitations in the audit
All of the above
All of the above
A properly constructed engagement letter should discuss the responsibilities of the auditors, management as well as the risks and limitations of the audit engagement.
Example Question #1 : The Audit Process Documentation
Preplanning audit documentation includes
Results of substantive tests
Overall audit strategy
Confirmation letters
Internal control assessment
Overall audit strategy
A preplanning audit document will discuss the overall audit strategy. Planning an audit will include an internal control assessment, but not in the preplanning stage. Confirmation letters and substantive testing are part of the audit process.
Example Question #2 : The Audit Process Documentation
An audit supervisor reviewed the work performed by the staff to determine if the audit was adequately performed. The supervisor accomplished this by primarily reviewing which of the following?
Checklists
Analytical procedures
Financial statements
Working papers
Working papers
Audit documentation, or working papers, comprises the principal record of audit procedures performed, evidence obtained, and conclusions reached. Reviewing the working papers allows a supervisor to understand the work performed and the evidence obtained, and to evaluate whether the audit was adequately performed.
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