Which of the following best identifies the effect of an increase in the risk of material misstatement on detection risk and the extent of substantive procedures?. The acceptable level o
Trang 1AUD 2016 AICPA Released Questions
Level: Moderate
Please Note: These questions are released to the CPA Review providers with the
letter answer only (i.e no explanation given)
This document contains copyrighted material from the American Institute of
Trang 21 Which of the following procedures is an accountant required to perform before issuing a compilation report under Statements on
Standards for Accounting and Review Services (SSARS)?
Make inquiries of third parties regarding liabilities that appear in the financial statements
Read the financial statements and consider whether such financial statements appear to be free from obvious material errors Obtain a letter supporting management representations in the financial statements
Review account balances for material changes subsequent to the year end
2 Which of the following engagements may an accountant or practitioner perform when there is a lack of independence?
Compilation
Agreed-upon procedures
Review
Attestation
3 Which of the following ultimately determines the sufficiency and appropriateness of audit evidence to support the auditor's
conclusions?
Professional requirements
Professional standards
Professional experience
Professional judgment
Trang 31 Which of the following procedures is an accountant required to perform before issuing a compilation report under Statements on
Standards for Accounting and Review Services (SSARS)?
Make inquiries of third parties regarding liabilities that appear in the financial statements
Read the financial statements and consider whether such financial statements appear to be free from obvious material errors
Obtain a letter supporting management representations in the financial statements
Review account balances for material changes subsequent to the year end
2 Which of the following engagements may an accountant or practitioner perform when there is a lack of independence?
Compilation
Agreed-upon procedures
Review
Attestation
3 Which of the following ultimately determines the sufficiency and appropriateness of audit evidence to support the auditor's
conclusions?
Professional requirements
Professional standards
Professional experience
Professional judgment
Trang 44 Which of the following assertions is most closely related to the audit objective to verify that all sales have been recorded?
Completeness
Occurrence
Accuracy
Cutoff
5 Which of the following best identifies the effect of an increase in the risk of material misstatement on detection risk and the extent of
substantive procedures?
The acceptable level of detection risk decreases, and the extent of substantive procedures increases
The acceptable level of detection risk increases, and the extent of substantive procedures increases
The acceptable level of detection risk decreases, and the extent of substantive procedures decreases
The acceptable level of detection risk increases, and the extent of substantive procedures decreases
6 Which of the following is an analytical procedure?
Comparing current-year balances to prior-year balances
Matching sales invoices to shipping documents
Confirming accounts receivable
Making inquiries of client management
Trang 54 Which of the following assertions is most closely related to the audit objective to verify that all sales have been recorded?
Completeness
Occurrence
Accuracy
Cutoff
5 Which of the following best identifies the effect of an increase in the risk of material misstatement on detection risk and the extent of
substantive procedures?
The acceptable level of detection risk decreases, and the extent of substantive procedures increases
The acceptable level of detection risk increases, and the extent of substantive procedures increases
The acceptable level of detection risk decreases, and the extent of substantive procedures decreases
The acceptable level of detection risk increases, and the extent of substantive procedures decreases
6 Which of the following is an analytical procedure?
Comparing current-year balances to prior-year balances
Matching sales invoices to shipping documents
Confirming accounts receivable
Making inquiries of client management
Trang 67 An entity has an internal audit staff that the independent auditor assessed to be both competent and objective Which of the
following statements is correct about the independent auditor's use of the internal auditors to provide direct assistance in performing tests of controls?
The auditor cannot rely on any of the work of the internal auditors
The internal auditors should not be performing any audit procedures that the auditor is able to perform
The auditor can use internal auditors to assess control risk, but cannot rely on their tests of controls
The auditor should supervise, review, evaluate, and test the work performed by the internal auditors
8 Which of the following activities would be most helpful to a CPA in deciding whether to accept a new audit client?
Reviewing industry benchmarking data
Considering the client's compensation methods
Evaluating the CPA's ability to properly service the client
Evaluating the most recent peer review of the client's previous auditor
9 Which of the following statements correctly describes the "top-down approach" used during an audit of internal control over
financial reporting?
Begin reviewing balance sheet accounts and then review income statement accounts
Begin reviewing income statement accounts and then review balance sheet accounts
Begin by understanding the overall risks to internal control over financial reporting at the financial statement level
Begin by understanding the overall risks to internal control over financial reporting at the general ledger level
Trang 77 An entity has an internal audit staff that the independent auditor assessed to be both competent and objective Which of the
following statements is correct about the independent auditor's use of the internal auditors to provide direct assistance in performing tests of controls?
The auditor cannot rely on any of the work of the internal auditors
The internal auditors should not be performing any audit procedures that the auditor is able to perform
The auditor can use internal auditors to assess control risk, but cannot rely on their tests of controls
The auditor should supervise, review, evaluate, and test the work performed by the internal auditors
8 Which of the following activities would be most helpful to a CPA in deciding whether to accept a new audit client?
Reviewing industry benchmarking data
Considering the client's compensation methods
Evaluating the CPA's ability to properly service the client
Evaluating the most recent peer review of the client's previous auditor
9 Which of the following statements correctly describes the "top-down approach" used during an audit of internal control over
financial reporting?
Begin reviewing balance sheet accounts and then review income statement accounts
Begin reviewing income statement accounts and then review balance sheet accounts
Begin by understanding the overall risks to internal control over financial reporting at the financial statement level
Begin by understanding the overall risks to internal control over financial reporting at the general ledger level
Trang 810 Each of the following items should be included in a presentation of pro forma financial statements, except
The significant assumptions used in developing the pro forma information
The source of the historical information on which the pro forma information is based
An indication that the pro forma information is not necessarily indicative of results
All direct and indirect effects attributed to the related transaction
11 What standards are applicable for a compilation of a nonissuer?
Statements on Auditing Standards
Statements on Standards for Accounting and Review Services (SSARS)
Statements on Standards for Attestation Engagements (SSAE)
Generally accepted auditing standards (GAAS)
12 An auditor of a nonissuer exercising professional skepticism with respect to the risks of material misstatement due to fraud will
most appropriately
Adopt an attitude of acceptance unless evidence indicates otherwise
Authenticate documents used as audit evidence
Consider the reliability of information to be used as audit evidence
Assess the entity's document-retention controls before using documents as audit evidence
Trang 910 Each of the following items should be included in a presentation of pro forma financial statements, except
The significant assumptions used in developing the pro forma information
The source of the historical information on which the pro forma information is based
An indication that the pro forma information is not necessarily indicative of results
All direct and indirect effects attributed to the related transaction
11 What standards are applicable for a compilation of a nonissuer?
Statements on Auditing Standards
Statements on Standards for Accounting and Review Services (SSARS)
Statements on Standards for Attestation Engagements (SSAE)
Generally accepted auditing standards (GAAS)
12 An auditor of a nonissuer exercising professional skepticism with respect to the risks of material misstatement due to fraud will
most appropriately
Adopt an attitude of acceptance unless evidence indicates otherwise
Authenticate documents used as audit evidence
Consider the reliability of information to be used as audit evidence
Assess the entity's document-retention controls before using documents as audit evidence
Trang 1013 If an auditor of an issuer examines purchase orders obtained from the issuer to verify proper authorization of transactions, then
the auditor is conducting
A reperformance
A confirmation
An observation
An inspection
14 In a financial statement audit of a nonissuer, an auditor would consider a judgmental misstatement to be a misstatement that
Involves an estimate
Exists because of non-statistical sampling performed by the auditor
Arises from a flaw in the accounting system
Arises from a routine calculation
15 Which of the following statements is correct with respect to fraud encountered during an audit engagement of a nonissuer?
The distinguishing factor between fraud and error is the materiality of the transaction involved
An auditor who initially detects fraud ultimately makes the legal determination of whether fraud has actually occurred
Fraudulent financial reporting can include the unintentional misstatement of amounts or disclosures in financial statements
It is often difficult to detect fraudulent intent in matters involving accounting estimates and the application of accounting principles
Trang 1113 If an auditor of an issuer examines purchase orders obtained from the issuer to verify proper authorization of transactions, then
the auditor is conducting
A reperformance
A confirmation
An observation
An inspection
14 In a financial statement audit of a nonissuer, an auditor would consider a judgmental misstatement to be a misstatement that
Involves an estimate
Exists because of non-statistical sampling performed by the auditor
Arises from a flaw in the accounting system
Arises from a routine calculation
15 Which of the following statements is correct with respect to fraud encountered during an audit engagement of a nonissuer?
The distinguishing factor between fraud and error is the materiality of the transaction involved
An auditor who initially detects fraud ultimately makes the legal determination of whether fraud has actually occurred
Fraudulent financial reporting can include the unintentional misstatement of amounts or disclosures in financial statements
It is often difficult to detect fraudulent intent in matters involving accounting estimates and the application of accounting principles
Trang 1216.A senior auditor conducted a dual-purpose test on a client's invoice to determine whether the invoice was approved and to
ascertain the amount and other terms of the invoice Which of the following lists two tests that the auditor performed?
Substantive procedures and analytical procedures
Substantive analytical procedures and tests of controls
Tests of controls and tests of details
Tests of details and substantive procedures
17 Manual controls would most likely be more suitable than automated controls for which of the following?
Large, unusual, or nonrecurring transactions
High-volume transactions that require additional calculations
Situations with routine errors that can be predicted and corrected
Circumstances that require a high degree of accuracy
18 According to the PCAOB, each of the following statements is true with respect to the auditor's responsibility to communicate
material weaknesses in internal control over financial reporting, except:
All such weaknesses must be communicated in writing to the audit committee
All such weaknesses must be communicated in writing to management
All such weaknesses must be communicated prior to the issuance of the auditor's report on internal control over financial reporting All such weaknesses must be communicated in writing to all stockholders
Trang 1316.A senior auditor conducted a dual-purpose test on a client's invoice to determine whether the invoice was approved and to
ascertain the amount and other terms of the invoice Which of the following lists two tests that the auditor performed?
Substantive procedures and analytical procedures
Substantive analytical procedures and tests of controls
Tests of controls and tests of details
Tests of details and substantive procedures
17 Manual controls would most likely be more suitable than automated controls for which of the following?
Large, unusual, or nonrecurring transactions
High-volume transactions that require additional calculations
Situations with routine errors that can be predicted and corrected
Circumstances that require a high degree of accuracy
18 According to the PCAOB, each of the following statements is true with respect to the auditor's responsibility to communicate
material weaknesses in internal control over financial reporting, except:
All such weaknesses must be communicated in writing to the audit committee
All such weaknesses must be communicated in writing to management
All such weaknesses must be communicated prior to the issuance of the auditor's report on internal control over financial reporting
All such weaknesses must be communicated in writing to all stockholders
Trang 1419 According to SEC regulations, each of the following non-audit services will impair an auditor's independence, except
Designing a management information system that aggregates source data underlying the financial statements
Performing an internal audit function
Preparing the audit client's financial statements that are filed with the SEC
Preparing the audit client's tax return
20 At least how often should the PCAOB inspect a registered public accounting firm that regularly issues audit reports to 50 issuers?
Annually
Every two years
Every three years
As requested by the firm
21 According to the IFAC Code of Ethics for Professional Accountants, in deciding whether to disclose confidential information, the
professional accountant should consider which of the following relevant factors?
The time period to which the information relates
Whether the anticipated recipients are appropriate and the type of communication that is expected
Whether the information was obtained directly or indirectly and if it will benefit the recipient
Whether the information was obtained performing a paid service