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Auditing and Assurance services CPA practice questions with answers
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Auditing and Assurance services CPApractice questions
1) Spinner, CPA, had audited Lasco Corp.'s financial statements for the past several years. Prior to the
current year's engagement, a disagreement arose that caused Lasco to change auditing firms. Lasco has
demanded that Spinner provide Lasco with Spinner's working papers so that Lasco may show them to
prospective auditors to help them prepare their bids for Lasco's audit engagement. Spinner refused and
Lasco commenced litigation. Under the ethical standards of the profession, will Spinner be successful in
refusing to turn over the working papers?
A. Yes, because Spinner is the owner of the working papers
B. Yes, because Lasco is required to direct prospective auditors to contact Spinner to make
arrangements to view the working papers in Spinner's office
C. No, because Lasco has a legitimate business reason for demanding that Spinner surrender the
working papers
D. No, because it was Lasco's financial statements tha - answerA. Yes, because Spinner is the owner of
the working papers
2) Which of the following acts by a CPA is a violation of professional standards regarding the
confidentiality of client information?
A. Releasing financial information to a local bank with the approval of the client's mail clerk
B. Allowing a review of professional practice without client authorization
C. Responding to an enforceable subpoena
D. Faxing a tax return to a loan officer at the request of the client - answerA. Releasing financial
information to a local bank with the approval of the client's mail clerk
,3) In order for a firm to designate itself as "Members of the AICPA":
A all CPA owners must be members of the AICPA.
B. all owners, not just CPA owners, must be members of the AICPA.
C. the majority of CPA owners must be members of the AICPA.
D. the majority of all owners, not just CPA owners, must be members of the AICPA. - answerA all CPA
owners must be members of the AICPA.
4) In performing an attestation engagement, a CPA typically:
A. supplies litigation support services.
B. assesses control risk at a low level.
C. expresses a conclusion about an assertion.
D. provides management consulting advice. - answerC. expresses a conclusion about an assertion.
5) A CPA who is not in public practice is obligated to follow which of the following rules of conduct?
A. Independence
B. Integrity and objectivity
C. Contingent fees
D. Commissions - answerB. Integrity and objectivity
6) Nile, CPA, on completing an audit, was asked by the client to provide technical assistance in
integrating a new IT system. The set of pronouncements designed to guide Nile in this engagement is
the Statement(s) on:
A. Quality Control Standards.
B. Auditing Standards.
C. Standards for Accountants' IT Services.
,D. Standards for Consulting Services. - answerD. Standards for Consulting Services.
7) An accountant is required to comply with the provisions of the Statements on Standards
for Accounting and Review Services (SSARS) when performing which of the following tasks?
A. Preparing monthly journal entries
B. Providing the client with software to generate financial statements
C. Preparing financial statements of a nonissuer
D. Providing a blank financial statement format or template - answerC. Preparing financial statements of
a nonissuer
8) In an audit of a nonprofit organization under the Uniform Guidance rules, an auditor must comply
with all of the following, except:
A. plan the testing of internal control over major programs to achieve a low assessed level of control risk
for the assertions relevant to the compliance requirements for each major program.
B. compliance testing shall include tests of transactions and such other auditing procedures necessary to
provide the auditor sufficient evidence to support an opinion on compliance for each major program.
C. correspond with all individuals or entities that have received or made use of the federal award funds
and determine the appropriateness of such distributions.
D. follow up on prior audit findings. - answerC. correspond with all individuals or entities that have
received or made use of the federal award funds and determine the appropriateness of such
distributions.
9) The phrase "generally accepted accounting principles" is an accounting term that:
A. includes broad guidelines of general application but not detailed practices and procedures.
B. encompasses the conventions, rules, and procedures necessary to define accepted accounting
practice at a particular time.
C. provides a measure of conventions, rules, and procedures governed by the AICPA.
, D. is included in the audit report to indicate that the audit has been conducted in accordance with
generally accepted auditing standards (GAAS). - answerB. encompasses the conventions, rules, and
procedures necessary to define accepted accounting practice at a particular time.
10) A CPA is permitted to disclose confidential client information without the consent of the client to:
I. another CPA who has purchased the CPA's tax practice.
II. another CPA firm if the information concerns suspected tax return irregularities.
III. a state CPA society voluntary quality control review board.
A. I and III only
B. II and III only
C. II only
D. III only - answerD. III only
11) What is the definition of fraud in an audit of financial statements?
A. An intentional act that results in a material misstatement in financial statements that are the subject
of an audit
B. The unintentional misapplication of accounting principles relating to amounts, classification, manner
of presentation, or disclosure
C. An intentional act that results in a material weakness in financial statements that are the subject of an
audit
D. Management's inability to design and implement programs and controls to prevent, deter, and detect
material misstatements - answerA. An intentional act that results in a material misstatement in financial
statements that are the subject of an audit
12) A practitioner is engaged to express an opinion on management's assertion that the square footage
of a warehouse offered for sale is 150,000 square feet. The practitioner should refer to which of the
following sources for professional guidance?
A. Statements on Auditing Standards
B. Statements on Standards for Attestation Engagements
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