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CPA Audit Exam questions with answers 100% correct
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Exam of 9 pages for the course CPA at CPA (CPA Audit Exam)
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CPA Audit ExamQualified Opinion - answerThe F/S are fairly stated in all material respects, in
accordance w/ GAAP, except for a certain matter, i.e.:
1) Lack of sufficient appropriate audit evidence
2) Scope Limitation
3) Material departure from GAAP (due to inadequate disclosure, inappropriate
accounting principles, or unreasonable accounting estimates)
4) One of the required F/S is missing
Disclaimer of Opinion - answerAuditor does not express an opinion due to a sufficiently
material scope limitation.
The Statement of Cash Flows - answerComprises the amounts and balances derived
from the I/S and B/S.
Reperformance - answerThe independent execution of procedures or controls that were
originally performed as part of the entity's internal control, either manually or via use of
computer-assisted audit techniques (CAATs).
Analytical Procedures - answerEvaluations of F/S information made by a study of
plausible relationships among both financial and nonfinancial data.
What are the 6 Types of Audit Procedures? - answer1) Observation
2) Inquiry
3) Confirmation
4) Recalculation
5) Reperformance
6) Analytical Procedures
Observation - answerLooking at a process or procedure being performed by others.
Inquiry - answerSeeking information of knowledgeable persons, both financial and
nonfinancial, inside or outside of the entity.
Confirmation - answerObtaining a representation of information or of an existing
condition directly from a third party.
, When would an auditor decide to perform only substantive procedures for specific
assertions? - answerBecause the auditor believes that control policies and procedures
are unlikely to pertain to the assertions.
How should an auditor develop an audit approach and detailed procedures? -
answerAuditors should assess inherent risk in relation to the F/S assertions, about
material account balances and classes of transactions, taking account of factors
relevant both to the entity as a whole and to the specific assertions.
What do effective internal controls provide? - answer1) More assurance about the
reliability of audit evidence - the accounting data and F/S
2) More assurance is provided when info is obtained directly to auditor from outside,
independent sources
Is audit evidence persuasive or convincing? - answerIt is persuasive, meaning it can
influence or cause one to believe by appealing to understanding vs convincing (criminal
law, "beyond a reasonable doubt"). Professional judgment is required when evaluating
reliability and sufficiency of audit evidence.
What are the factors an auditor should consider when planning a particular sample for a
substantive test of details? - answer1) The auditor's assessment of the risk of material
misstatement.
2) The assurance obtained from other substantive procedures directed at the same
assertion.
3) The auditor's allowable risk of incorrect acceptance
4) Tolerable Misstatement
5) Expected Misstatement for the population
6) Stratification of the population when performed
7) For some sampling methods, the number of sampling units in each stratum
If the Sample Rate of Deviation + Allowance for Sampling > Tolerable Rate, what would
the auditor likely conclude? - answerThe control is not operating effectively and
therefore should not be relied upon because the projected rate > max tolerable rate.
Non-Sampling Risk - answerIncludes all aspects of audit risk that are not due to
sampling. It includes the possibility of selecting audit procedures that are not
appropriate to achieve the specific objective.
Examples:
1) Failure to properly define the audit population
2) Failure to define clearly the nature of an audit exception
3) Failure to recognize an error when one exists in the sample
4) Failure to evaluate sample findings properly
Sampling Risk - answerArises from the possibility that when a substantive test is
restricted to a sample, conclusions might be different than if the auditor had tested each
item in the population.
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