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Audit CPA Exam| Questions with 100% Verified Answers
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Audit CPA Exam| Questions with100% Verified Answers
An audit of of a single financial statement may be performed as a... - ✔️✔️separate
engagement or
with the entity's complete set of financial statements
Report on compliance - ✔️✔️can be a separate report of compliance or
provide on or more paragraphs in auditors report - other matter paragraph
SSARS does not apply is when the accountant prepares financial statements: -
✔️✔️solely for submission to taxing authorities,
in conjunction with litigation services that involve pending or potential legal or
regulatory proceedings, or
in conjunction with business valuation services.
The accounting and review services committee is the - ✔️✔️authoritative body
designated to promulgate standards concerning an accountant's association with
unaudited financial statements of a nonissuer (i.e., an entity that is not required
to file financial statements with an agency regulating the issuance of the entity's
securities)
Not required for a review - ✔️✔️Test internal control
,Perform audit tests
Assess fraud risk
Communicate with the predecessor accountant (you can but not required, up to
judgement of the accountant)
Review report for special purpose framework - ✔️✔️include an emphasis of matter
paragraph and if it is regulatory or contractual basis you need to add description
of purpose
Other accountants involved in prior periods - ✔️✔️When predecessor accountants
are asked to reissue their prior report (audit, review, compilation) they should
read the new financial statements AND obtain a representation letter from the
new accountant
But if their report is not reissued then the new accountant should make reference
to their report in the current report or perform that level of service themselves
When you have a problem take it to.. - ✔️✔️Management and if they refuse take it
to the BOD and audit committee and if they refuse then you should withdraw and
get legal help
Interim financial information presented in a registration stmt - ✔️✔️the
independent auditors involvement should clarify that the report is not considered
to be a "report" or "part" of the registration statement
,Standards that apply to services a CPA may provide - ✔️✔️Audit Engagements: SAS
(statements on auditing standards), PCAOB standards for issuers
Compilation and review engagements: SSARS (statements on standards for
accounting and review services
Attest Engagements: SSAE (statements on standards for attestation engagements
Computer systems and software attestation - ✔️✔️Trust services: used to address
risk and opportunities related to IT
security, availability, processing integrity, online privacy and confidentiality
WebTrust - provide assurance related to ecommerce
SysTrust - reliability of any defined electronic system
Examination of prospective financial statements - ✔️✔️The purpose is to express
opinion on whether the statements are presented in conformity with AICPA
guidelines and the underlying assumptions provide a reasonable basis for the
prospective statements
Independence required
evidence required
Modifications to opinion on examination - ✔️✔️AICPA presentation guidelines are
not followed (qualified or adverse)
, Significant assumptions are not disclosed (adverse)
Basis not reasonable - adverse
Scope limitation - disclaimer
The following would raise concerns regarding management philosophy and
operating style: - ✔️✔️Management consumed with meeting the budget (pressure)
Management dominated by one person (opportunity -mgmt override)
Management compensation contingent upon the entitys financial performance
(bonus & stock - rationale)
Information processing controls: general vs application controls - ✔️✔️General
controls apply to information processing throughout the company
Application controls apply to information processing throughout the company
Need to document auditor understanding of internal,
ways to do that are... - ✔️✔️FIND
Flowcharts
Internal control questionnaires - used for each assertion of management
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