CPA Auditing and Attestation (AUD) : The Audit Process - Documentation
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : Quality Control, Engagement Acceptance, Planning, & Internal Control
Auditors document the terms of engagement in:
Auditors Planning Letter
Comfort Letter
Engagement 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
All of the above
Management responsibilities
Discussion of inherent limitations in the audit
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 #3 : Quality Control, Engagement Acceptance, Planning, & Internal Control
Preplanning audit documentation includes
Results of substantive tests
Internal control assessment
Overall audit strategy
Confirmation letters
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 #4 : Quality Control, Engagement Acceptance, Planning, & Internal Control
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?
Working papers
Checklists
Financial statements
Analytical procedures
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.
Example Question #5 : Quality Control, Engagement Acceptance, Planning, & Internal Control
At the completion of an audit, which of the following entities has ownership of the audit working papers?
The client
The CPA firm that performed the audit
The client's stockholders
The client's audit committee
The CPA firm that performed the audit
The CPA firm that performed the audit has ownership of the audit working papers. These work papers provide support for the audit opinion and contain information detailing the audit work performed.
Example Question #5 : The Audit Process Documentation
A ______ is specifically someone who performs work on an engagement of a component's financial information that will be used as audit evidence of a group audit.
Component auditor
Third-party auditor
Independent auditor
External auditor
Component auditor
A component auditor rightfully conducts audit procedures of a component of a larger group audit.
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