CPA Auditing and Attestation (AUD) : Performing Further Procedures
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : Investment Cycle
In confirming with an outside agent such as a financial institution that the agent is holding securities in the client's name, the auditor most likely gathers evidence in support of management's financial statement assertions of existence and:
Completeness
Understandability and classification
Rights and obligations
Valuation and allocation
Rights and obligations
A confirmation from an outside agent indicating that securities are being held in the client's name provides evidence with respect to both the existence assertion and the rights and obligations assertion.
Example Question #2 : Investment Cycle
The investment cycle requires strong segregation of duties over all of the following except:
Record keeping
Authorization of purchases and sales
Custody of investments
These are all critical for proper segregation of duties
These are all critical for proper segregation of duties
In any business process or environment, record keeping should be separate from authorization which should be separate from custody.
Example Question #1 : Communication With Management
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
audit committee
IRS
management
police
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 #151 : Cpa Auditing And Attestation (Aud)
“Significant Difficulties” encountered through an audit that should be communicated to governance include:
All of the answer choices are correct.
Significant delays in management providing information
Restrictions imposed on the auditor
The unavailability of expected 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 #152 : Cpa Auditing And Attestation (Aud)
According to AU 380, the auditor must communicate to those charged with governance all items related to the audit except those that:
The auditor's judgment deems them immaterial
Both A and B
Neither A and B
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 #153 : Cpa Auditing And Attestation (Aud)
An auditor's communication with those charged with governance is required to include the:
Discussion of disagreements with management about matters that significantly impact the financial statements
Assessment of the quality of the entity's earnings as compared to the previous year
Basis for the auditor's preliminary judgement about materiality
Justification for the auditor's selection of sampling methods
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 #154 : Cpa Auditing And Attestation (Aud)
An auditor's communication of internal control related matters noted in an audit usually should be addressed to:
The director of internal auditing
The chief accounting officer
Management and those charged with governance
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 #155 : Cpa Auditing And Attestation (Aud)
An auditor should communicate a deficiency to a non-issuer client's management only either orally or in writing when there is a:
Significant deficiency
Control deficiency
None of the answer choices are correct
Material weakness
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.
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