CPA Auditing and Attestation (AUD) : Integrated Audits & Attestation Engagements

Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)

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Example Questions

Example Question #1 : Types Of Engagements Ssars

One of the general conditions for SSARS engagements contains the phrase “presumptively mandatory requirements”. Under this definition:

Possible Answers:

Auditors must comply except where it is not cost efficient to do so

Auditor judgement prevails

Noncompliance is allowed it the procedure is deemed ineffective

Auditors must comply with requirements

Correct answer:

Auditors must comply with requirements

Explanation:

The concept of presumptive mandatory requirements assumes that in the absence of persuasive evidence, the auditor must comply with the pronouncement.

Example Question #2 : Types Of Engagements Ssars

Auditors should not accept and engagement under SSARS if they question:

Possible Answers:

All of the answer choices are correct

Managements integrity

Information needed may not be available

Independence requirements will not be satisfied

Correct answer:

All of the answer choices are correct

Explanation:

Under SSARS guidance an auditor should not accept an engagement if they are concerned about management integrity or the availability of information.  An engagement should also not be accepted if independence requirements are impaired.

Example Question #3 : Types Of Engagements Ssars

Jim Jones, CPA has been engaged by management to assist them in the preparation of financial statements. This engagement qualifies as a:

Possible Answers:

Audit

Review

Attestation

Compilation

Correct answer:

Compilation

Explanation:

A compilation engagement is one in which the accounting firm assists management with the preparation of its financial statements.

Example Question #3 : Types Of Engagements Ssars

A CPA auditor has determined that a client which had received a federal grant, fraudulently reported information to the federal government. Management of the client refuses to recognize the fraud. Of the following parties, which should the auditor contact first?

Possible Answers:

The agency that provided the grant

The state attorney general's office

The state board of accountancy

The recipiencts of the client services

Correct answer:

The agency that provided the grant

Explanation:

First, the auditor should attempt to reach the agency that provided the grant in reporting the fraud. The others listed are not required to contact.

Example Question #5 : Types Of Engagements Ssars

GAS require a written report on internal control:

Possible Answers:

In every audit

Only when there are reportable conditions

Only when there are reportable conditions that are significant enough to be material weaknesses

Either orally or in writing

Correct answer:

In every audit

Explanation:

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?

Possible Answers:

Compilation

Review

All require limited assurance

Preparation

Correct answer:

Review

Explanation:

Of the options, preparation and compilation require no assurance whereas review engagements require limited assurance.

Example Question #1 : Types Of Engagements Ssae

An agreed-upon procedure report is:

Possible Answers:

Required to follow IFRS guidelines

Reports the findings of the agreed upon procedures to management

Is a required report mandated by the SEC

Presented in accordance with GAAP

Correct answer:

Reports the findings of the agreed upon procedures to management

Explanation:

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 #2 : Types Of Engagements Ssae

As a pre-condition to an agreed-upon procedure engagement.

Possible Answers:

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 may agree upon the conclusions of the report with management

Correct answer:

The auditor is required to be independent

Explanation:

As described in section AT 201, a practitioner may accept an agreed-upon procedure engagement “that the practitioner is independent”.

Example Question #3 : Types Of Engagements Ssae

According to SSAE 18: The auditor should “establish an understanding with the engaging party regarding the nature of the engagement, including the following":

Possible Answers:

All of the answer choices are correct

Whether the report is restricted to use

The intended purpose of the engagement

Whether the engagement is pursuant to any law regulation or contract

Correct answer:

Whether the report is restricted to use

Explanation:

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 #4 : Types Of Engagements Ssae

Of the following standards, which should a CPA firm apply in a review of pro forma financial information?

Possible Answers:

SSARS

Statements on Standards for Consulting Services

SSAE

GAAS

Correct answer:

SSAE

Explanation:

A CPA should refer to SSAE for a review of pro forma financial information.

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