Você está na página 1de 13

Which of the following procedures would be most effective in reducing attestation risk?

Discussion with responsible individuals.

Examination of evidence.
This answer is correct.
To express an opinion, the practitioner must gather sufficient evidence to reduce
attestation risk to an acceptably low level.
Inquiries of senior management.
Analytical procedures.
During the course of an audit, an auditor required additional research and consultation with others. This
additional research and consultation is considered to be

An appropriate part of the professional conduct of the engagement.

This answer is correct.
The Code of Professional Conduct states that in many cases additional research and
consultation with others may be necessary during an engagement. The auditor should
not undertake the engagement unless (s)he has or expects to gain the knowledge to
complete the audit with professional competence.
A responsibility of the management, not the auditor.
A failure on the part of the CPA to comply with GAAS because of a lack of
An unusual practice indicating that the CPA should not have accepted the engagement.
A financial forecast consists of prospective financial statements that present an entitys expected financial
position, results of operations, and cash flows. A forecast

Is based on the most conservative estimates.

Presents estimates given one or more hypothetical assumptions.

Unlike a projection, may contain a range.
Is based on assumptions reflecting conditions expected to exist and courses
of action expected to be taken.
This answer is correct.
According to AT 301, a financial forecast consists of prospective financial
statements that present, to the best of the responsible partys knowledge and
belief, an entitys expected financial position, results of operations, and cash
flows. A forecast is based on the responsible partys assumptions reflecting
conditions it expects to exist and the course of action it expects to take.
The client of the practitioner providing ElderCare (PrimePlus) services may be

The Elderly

The Elderly

A Family







This answer is correct.

The client varies with the engagement. The practitioner must understand who the client
is and who has final authority to resolve issues during the engagement. If the client is a
family member or some third party, that person must have power of attorney over the
elderly person involved.
Which of the following statements best explains why the CPA profession has found it essential to
establish ethical standards and means for ensuring their observance?

A distinguishing mark of a profession is its acceptance of responsibility to the public.

This answer is correct.
According to the Principles section of the AICPA Code of Professional Conduct,
Members should accept the obligation to act in a way that will serve the public
interest, honor the public trust, and demonstrate commitment to professionalism. A
distinguishing mark of a profession is acceptance of its responsibility to the public.
A requirement for a profession is to establish ethical standards that stress primarily a
responsibility to clients and colleagues.
Ethical standards that emphasize excellence in performance over material rewards
establish a reputation for competence and character.
Vigorous enforcement of an established code of ethics is the best way to prevent
unscrupulous acts.
Adams is the executive partner of Adams & Co., CPAs. One of its smaller clients is a large nonprofit
charitable organization. The organization has asked Adams to be on its board of directors, which consists
of a large number of the communitys leaders. Membership on the board is honorary. Adams & Co. would
be considered to be independent

Under no circumstances.
As long as Adams directorship was disclosed in the organizations financial
As long as Adams was not directly in charge of the audit.
As long as Adams does not perform or give advice on management functions of the
This answer is correct.
The member is independent if (1) the position is purely honorary, (2) it is identified as
such in all letterheads and externally circulated materials in which (s)he is named as a
director or trustee, and (3) (s)he does not vote or participate in management functions.
An auditor strives to achieve independence in appearance to

Maintain public confidence in the profession.

This answer is correct.

Third parties depend on the CPAs report because (s)he is viewed as possessing the
necessary impartiality. Public confidence is impaired if such objectivity even appeared
to be lacking. The auditor must guard against the presumption of a loss of
independence in addition to maintaining independence of mind.
Become independent in fact.
Comply with GAAP.
Maintain an unbiased mental attitude.
Which of the following actions by a CPA most likely violates the professions ethical standards?

Arranging with a financial institution to collect notes issued by a client in payment of

fees due.
Compiling the financial statements of a nonpublic client that employed the CPAs
spouse as a bookkeeper.
Retaining client-provided records after the client has demanded their return.
This answer is correct.
Retention of client-provided records after demand is made for them by the client is an
act discreditable to the profession and a violation of the Code. Even if the state in
which a member practices grants a lien on certain records, this ethical standard is
Purchasing a segment of an insurance companys business that performs actuarial
services for a nonpublic clients employee benefit plans.
Which of the following, if any, is prohibited by the AICPA Code of Professional Conduct?

Practice of public accounting in the form of a professional corporation that uses a firm
name indicating specialization.
Use of the partnership name for a limited period by one of the partners in a public
accounting firm after the death or withdrawal of all other partners.
Failing to provide working papers to the client after a request has been made.
All of the answers are permitted by the AICPA Code of Professional Conduct.
This answer is correct.
No response states conduct prohibited by the Code.
Under which of the following circumstances may a CPA charge fees that are contingent upon finding a
specific result?

For an examination of prospective financial statements.

For an audit or a review if agreed upon by both the CPA and the client.
For a compilation if a third party will use the financial statement and disclosure is not
made in the report.
If fixed by courts, other public authorities, or in tax matters if based on the results of
judicial proceedings.
This answer is correct.

A contingent fee is established as part of an agreement under which the amount of the
fee is dependent upon the finding or result. Fees are not deemed to be contingent if
fixed by courts or other public authorities, or in tax matters, if they are based on the
results of judicial proceedings or the finding of governmental agencies.
According to the PCAOB, which of the following tax services may be provided jointly with the audit of an
issuers financial statements without impairing independence?

Planning and issuing an opinion in favor of the tax treatment of an aggressive tax
Reviewing a proposed transaction and informing the client of the tax consequences.
This answer is correct.
When the client is an issuer, PCAOB and SEC independence standards apply. Under
these standards, tax compliance services preapproved by the audit committee are
Providing consultations under a contingency fee arrangement.
Preparing tax returns for an individual in a financial oversight reporting role during the
audit period.
Which of the following is correct regarding the communication between successor and predecessor

The successor and predecessor auditors should communicate with each other in writing
regarding potential problems.
The successor auditor should contact the predecessor auditor prior to proposing an
audit engagement.
The client should be present during the communications between the predecessor
auditor and the successor auditor.
The successor auditor should request permission from the prospective client to make an
inquiry of the predecessor auditor.
This answer is correct.
The auditor should communicate with the predecessor auditor before final acceptance
of the engagement. The predecessor is expected to respond promptly and, absent
unusual circumstances, fully.The auditor is responsible for initiating the
communication. The Code of Professional Conduct protects the confidentiality of client
information. Thus, the auditor and the predecessor auditor should obtain client
permission to have discussions about the integrity of management as well as pertinent
audit-related issues.
An auditor who discovers that a clients employees paid small bribes to municipal officials most likely
would withdraw from the engagement if

The payments violated the clients policies regarding the prevention of illegal acts.
The client receives financial assistance from a federal government agency.
Documentation that is necessary to prove that the bribes were paid does not exist.
Management fails to take the appropriate remedial action.

This answer is correct.

When the auditor concludes that an illegal act has or is likely to have occurred, (s)he
should discuss the matter with the appropriate level of management and request that
any necessary remedial actions be taken. If the alleged noncompliance has a material
effect on the financial statements or the client does not take the remedial action that the
auditor considers necessary, the auditor should express a qualified or adverse opinion,
depending on the level of materiality, or withdraw from the engagement.
When assessing an internal auditors competence, an auditor ordinarily obtains information about all of
the following except

Quality of audit documentation.

Educational level and professional experience.
Audit programs and procedures.
Access to information about related parties.
This answer is correct.
If the external auditor plans to use the work of the internal auditors to obtain evidence
or to provide direct assistance, the competence and objectivity of the internal auditors
should be assessed. Assessing competence involves obtaining information about
(1) education and experience; (2) professional certification and CPE; (3) audit policies,
programs, and procedures; (4) practices regarding assignment of internal auditors;
(5) supervision and review of their activities; (6) quality of audit documentation,
reports, and recommendations; and (7) evaluation of internal auditors performance. An
internal auditors access to information is related to objectivity.
Which of the following could be difficult to determine because electronic evidence may not be retrievable
after a specific period?

The acceptance level of detection risk.

The timing of control and substantive tests.
This answer is correct.
The timing of control and substantive tests are, at least in part, determined based on the
availability and retrievability of evidence over a period of time.
Whether to adopt substantive or reliance test strategies.
The assessed level of inherent risk.
Evidence concerning the proper segregation of duties for receiving and depositing cash receipts
ordinarily is obtained by

Completing an internal control questionnaire that describes the control activities.

Observing the employees who are performing the control activities.
This answer is correct.
Observation is a risk assessment procedure performed to obtain an understanding of the
entity and its environment, including its controls. It is also a test of controls.
Observation of entity activities and operations supports inquiries of management and

provides information about the entity and its environment.

Performing substantive procedures to verify the details of the bank balance.
Preparing a flowchart of the duties performed and the entitys available personnel.
For several years a clients physical inventory count has been lower than what was shown on the books
at the time of the count, and downward adjustments of the inventory account have been required.
Contributing to the inventory problem could be material weaknesses in internal control that led to the
failure to record some

Purchases returned to vendors.

This answer is correct.
Purchases returned to the vendor but not recorded overstate inventory records. The
goods are reflected in inventory but are not on hand.
Sales returns received.
Sales discounts allowed.
Cash purchases.
The ultimate purpose of understanding the entity and its environment and assessing the risks of material
misstatement is to contribute to the auditors assessment of the risk that

Tests of controls may fail to identify procedures relevant to assertions.

Material misstatements may exist in the financial statements.
This answer is correct.
The auditors objective is to identify and assess the RMMs, whether due to fraud or
error, at the financial statement and relevant assertion levels. This objective is achieved
through understanding the entity and its environment, including its internal control. The
understanding provides a basis for designing and implementing responses to the
assessed RMMs (AU-C 315 and AS No. 12). Moreover, the auditors overall objectives
in an audit include obtaining reasonable assurance about whether the statements as a
whole are free from material misstatement (AU-C 200).
Specified controls requiring segregation of duties may be circumvented by collusion.
Entity policies may be inappropriately overridden by senior management.
An auditors written communication of internal control related matters identified in an audit would be
addressed to those charged with governance, which would include the

Board of directors.
This answer is correct.
In many organizations, governance is provided by the board of directors (and its related
audit committee). However, the communication may be made to individuals at an
equivalent level of authority and responsibility if the organization does not have a
Director of internal auditing.
Chief financial officer.
Chief accounting officer.

The objective of tests of details of transactions performed as substantive procedures is to

Comply with generally accepted auditing standards.

Attain assurance about the reliability of the accounting system.
Detect material misstatements at the relevant assertion level.
This answer is correct.
Substantive procedures are (1) tests of the details of transaction classes, balances, and
disclosures and (2) substantive analytical procedures. They are performed to detect
material misstatements at the relevant assertion level. The auditor performs substantive
procedures as a response to the related assessment of the RMMs (AU-C 330).
Evaluate whether managements policies and procedures operated effectively.
Which of the following documents are examples of audit evidence generated by the client?

Customer purchase orders and bank statements.

Shipping documents and receiving reports.
This answer is correct.
Shipping documents and receiving reports are a result of the operations of the client. As
goods are shipped to customers, a shipping document is prepared by the client. As
goods are received from vendors, a receiving report is prepared by the client.
Vendor invoices and packing slips.
Bills of lading and accounts receivable confirmations.
Which of the following audit procedures would an auditor most likely perform to test controls relating to
managements assertion concerning the completeness of sales transactions?

Verify that extensions and footings on the entitys sales invoices and monthly customer
statements have been recomputed.
Inspect the entitys reports of prenumbered shipping documents that have not been
recorded in the sales journal.
This answer is correct.
The completeness assertion relates to whether all transactions that should have been
recorded in the accounting records were included. Thus, unrecorded shipping
documents would indicate that not all transactions are being properly recorded.
Compare the invoiced prices on prenumbered sales invoices to the entitys authorized
price list.
Inquire about the entitys credit granting policies and the consistent application of
credit checks.
Purchase cutoff procedures should be designed to test that merchandise is included in the inventory of
the client company if the company

Has paid for the merchandise.

Has physical possession of the merchandise.
Holds legal title to the merchandise.

This answer is correct.

In general, a cutoff ensures that transactions are recorded in the appropriate period. A
proper purchase cutoff is intended to assure inclusion of the goods in inventory and the
recognition of a liability in the period in which the client acquired title to the goods.
Holds the shipping documents for the merchandise issued in the companys name.
An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the
relevant assertion that all

Noncapitalizable expenditures for repairs and maintenance have been recorded in the
proper period.
Expenditures for property and equipment have been recorded in the proper period.
Noncapitalizable expenditures for repairs and maintenance have been properly charged
to expense.
Expenditures for property and equipment have not been charged to expense.
This answer is correct.
The auditor should vouch significant debits from the repairs and maintenance expense
account to determine whether any should have been capitalized.
Which of the following management roles would typically be acknowledged in a management
representation letter?
Management has the responsibility for the design of controls to detect fraud.
This answer is correct.
Management has the responsibility to design, implement, and maintain internal control
to prevent and detect fraud. The auditor is required to request that management
provide written representations acknowledging this responsibility and disclosing other
fraud-related matters (AU-C 580).
Management communicates its views on ethical behavior to its employees.
Managements knowledge of fraud is communicated to the audit committee.
Managements compensation is contingent upon operating results.
Kirk Keller, CPA, was about to express an unmodified opinion on the audit of Lupton Television
Broadcasting Company when he received a letter from Luptons independent counsel. The letter stated
that the Federal Communications Commission has notified Lupton that its broadcasting license will not be
renewed because of some alleged fraud in its broadcasting practices. Lupton cannot continue to operate
without this license. Keller has also learned that Lupton and its independent counsel plan to take all
necessary legal action to retain the license. The letter from the independent counsel, however, states that
a favorable outcome of any legal action is highly uncertain. Based on this information, Keller should

Express an unmodified opinion with disclosure of the event in a separate emphasis-ofmatter paragraph of his report.
This answer is correct.
According to AU-C 570, an evaluation should be made as to whether substantial doubt
exists about the entitys ability to continue as a going concern for a reasonable period
of time. For U.S. GAAP, the reasonable period is 1 year after the date that the financial
statements are issued or are available to be issued. If the auditor reaches this conclusion
after identifying conditions and events that create such doubt and after evaluating

managements plans to mitigate their effects, (s)he should consider the adequacy of
disclosure and include an emphasis-of-matter paragraph (after the opinion paragraph)
in the report. This paragraph should use the phrases substantial doubt and going
concern, but it should not contain conditional language. If the entitys disclosure is
inadequate, the material misstatement requires modification of the opinion. By itself,
however, the substantial doubt does not require a modified opinion or a disclaimer of
opinion. But AU-C 570 does not preclude issuing a disclaimer of opinion in cases
involving uncertainties.
Issue an unmodified report because the event happened after year end.
Express an adverse opinion on the financial statements and disclose all reasons
Express a piecemeal opinion with full disclosure made of the license dispute in a note
to the financial statements.
The sample size of a test of controls varies inversely with
Expected Population
Tolerable Population
Deviation Rate
Deviation Rate


This answer is correct.

The expected population deviation rate directly affects the sample size. As it
increases, the sample size increases. However, the tolerable population
deviation rate varies inversely with sample size. As it decreases, the sample
size increases.
The accuracy of information included in notes that accompany the audited financial statements of a
company whose shares are traded on a stock exchange is the primary responsibility of the

Stock exchange officials.

Independent auditor.
Companys management.
This answer is correct.
The notes are considered part of the basic financial statements. Because management
has the primary responsibility for the financial statements, it also has the primary
responsibility for the accuracy of information included in notes.
Securities and Exchange Commission.
An auditor expresses a qualified opinion because of a material misstatement related to specific amounts
in the financial statements. Which of the following phrases should be included in the opinion paragraph?

When Read in
Conjunction with

With the Foregoing

Note X








This answer is correct.

The auditor should use the phrase except for to qualify an opinion, followed by the
basis for the qualification and a reference to the basis for qualified opinion paragraph
preceding the opinion paragraph. Given a qualification because of a material
misstatement related to specific amounts in the financial statements, the basis
paragraph should describe the matter resulting in the qualification. It also should
include (1) a description and quantification of the financial effects, if practicable; (2) an
explanation of how narrative disclosures are misstated; or (3) omitted information, if
practicable, and a description of its nature. However, if financial-effects disclosures are
made in a note to the statements, the basis paragraph may refer to it. Furthermore, the
notes are part of the financial statements, and a phrase such as when read in
conjunction with Note X in the opinion paragraph is likely to be misunderstood. Also,
wording such as with the foregoing explanation is neither clear nor forceful enough.
When financial statements contain a departure from U.S. GAAP because, due to unusual circumstances,
the statements would otherwise be misleading, the auditor should explain the unusual circumstances in a
separate paragraph and express an opinion that is

This answer is correct.
The Code of Professional Conduct prohibits expression of an opinion that financial
statements are in conformity with U.S. GAAP if they contain a material departure from
a principle. However, an exception is permitted when the auditor can demonstrate that,
because of unusual circumstances, the statements would otherwise have been
misleading. If no other basis for modifying the opinion exists, the CPA may express an
unmodified opinion provided that (s)he describes in an other-matter paragraph of the
report the departure, its effects, and the reasons compliance with U.S. GAAP would
have been misleading.
Qualified or adverse, depending on materiality and pervasiveness.
Delta Life Insurance Co. prepares its financial statements on an accounting basis insurance companies
use pursuant to the rules of a state insurance commission. If Wall, CPA, Deltas auditor, discovers that
the statements are not suitably titled, Wall should

Disclose any reservations in a basis for qualified opinion paragraph and qualify the
This answer is correct.
Terms such as balance sheet, statement of income, or other unmodified titles are

ordinarily understood to apply to statements presented in accordance with GAAP.

Consequently, the auditor of statements prepared under a special purpose framework
should consider whether the statements are suitably titled. If (s)he believes they are not,
the auditor should disclose his or her reservations in a basis for qualified opinion
paragraph (AU-C 800).
Apply to the state insurance commission for an advisory opinion.
Issue a special statutory-basis report that clearly disclaims any opinion.
Explain in the notes to the financial statements the terminology used.
Which of the following is correct regarding a compilation of financial statements engagement in
accordance with Statements on Standards for Accounting and Review Services?
If the accountants independence is impaired, a qualified opinion must be issued.
The accountant may not base the report on information obtained from prior
engagements with the same client.
The accountant is not required to make inquiries or perform procedures to corroborate
the information provided by the client.
This answer is correct.
The accountant should read the financial statements after obtaining an understanding of
the reporting framework and the entitys significant accounting policies. The accountant
then should consider whether the financial statements appear to be appropriate in form
and free from obvious material misstatements. However, the accountant is not required
to make inquires or perform other procedures to verify, corroborate, or review
information supplied by the entity.
The accountant should perform analytical procedures on financial data.
Which of the following procedures would most likely be included in a review engagement of a nonissuer?

Preparing a bank transfer schedule.

Inquiring about related party transactions.
This answer is correct.
The accountants understanding of the entitys business should include a general
understanding of (1) the entitys organization; (2) its operating characteristics; and
(3) the nature of its assets, liabilities, revenues, and expenses. This would ordinarily
involve a general knowledge of the entitys production, distribution, and compensation
methods, types of products and services, operating locations, and material transactions
with related parties.
Performing tests of controls.
Performing cutoff tests on sales and purchases transactions.
Which of the following procedures would an accountant least likely perform during an engagement to
review the financial statements of a nonissuer?

Observing the safeguards over access to and use of assets and records.
This answer is correct.
A review does not require obtaining an understanding of internal control or assessing

risks, testing accounting records, or performing other procedures ordinarily performed

in an audit (AR-C 90).
Comparing the financial statements with anticipated results in budgets and forecasts.
Inquiring of management about actions taken at the board of directors meetings.
Studying the relationships of financial statement elements expected to conform to
predictable patterns.
Which of the following procedures would an accountant most likely perform when reviewing the financial
statements of a nonissuer?

Ask management about the entitys procedures for recording transactions.

This answer is correct.
A review primarily includes applying analytical procedures to managements financial
data and making inquiries of management. An accountant also obtains written
representations. For example, the accountant should consider inquiring of members of
management who have responsibility for financial and accounting matters about
(1) whether the statements have been prepared in accordance with the applicable
financial reporting framework (e.g., U.S. GAAP); (2) the entitys accounting principles
and practices and the methods followed in applying them; and (3) the entitys
procedures for recording, classifying, and summarizing transactions and accumulating
information for disclosure in the statements.
Obtain an understanding of the entitys internal control components.
Send a letter of inquiry to the entitys attorney regarding pending litigation.
Assess the risk of material misstatement arising from fraudulent financial reporting.
A practitioners compilation report on a financial forecast should include a statement that

The forecast should be read only in conjunction with the audited historical financial
The practitioner expresses only limited assurance on the forecasted statements and their
There will usually be differences between the forecasted and actual results.
This answer is correct.
The compilation report states that a compilation is limited in scope and does not enable
the practitioner to express an opinion or any other form of assurance. It adds that
forecasted and actual results usually differ.
The hypothetical assumptions used in the forecast are reasonable in the circumstances.
A practitioner accountant who accepts an engagement to compile a financial projection most likely would
make the client aware that the

Projection may not be included in a document with audited historical financial

Accountants responsibility to update the projection for future events and
circumstances is limited to 1 year.

Projection omits all hypothetical assumptions and presents the most likely future
financial position.
Engagement does not include an evaluation of the support for the assumptions
underlying the projection.
This answer is correct.
The standard report states that a compilation is limited in scope and does not enable the
practitioner to express an opinion or any other form of assurance on the projection or
the assumptions. It also states that a compilation does not include evaluation of the
support for the assumptions underlying the financial projection.
For financial audits, generally accepted government auditing standards (GAGAS) incorporate AICPA
standards. GAGAS prescribe additional requirements for reporting on

Laws, Regulations,
Contracts, and Grants

Reporting on
Internal Control

This answer is correct.

The report on financial statements (or separate reports) should describe the scope of the
auditors testing of internal control over financial reporting and compliance with laws
and regulations and grant or contract provisions. Auditors also should state whether
their tests provided sufficient appropriate evidence for opinions on the effectiveness of
internal control and compliance.