(CPA) Audit Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (CPA) Audit flashcards as text
Which of the following is an example of a substantive analytical procedure?
Answer: Comparing current-year gross margin to prior-year gross margin
Comparing current-year gross margin percentage to prior years is an analytical procedure that evaluates financial data by studying plausible relationships.
A client refuses to allow the auditor to confirm accounts receivable with customers. The auditor should:
Answer: Issue an unmodified opinion if alternative procedures provide sufficient evidence
If alternative procedures (such as examining subsequent cash receipts) provide sufficient appropriate evidence, an unmodified opinion may still be appropriate.
The primary purpose of preparing a lead schedule during an audit is to:
Answer: Summarize account balances and link them to the financial statements and supporting schedules
Lead schedules provide a summary of account balances, cross-reference to supporting workpapers, and tie account totals to the trial balance and financial statements.
Which of the following most likely represents a significant deficiency in internal control?
Answer: The absence of a process to identify and review complex accounting estimates
The absence of a review process for complex accounting estimates represents a significant deficiency because estimates carry high inherent risk and lack of oversight could allow material errors.
When auditing fair value measurements, the auditor's primary concern is typically:
Answer: Whether the assumptions and methods are reasonable and supportable
Auditors evaluate whether the entity's assumptions, inputs, and valuation techniques are reasonable and consistent with market-based evidence.
Under AU-C 560, which events after the balance sheet date require adjustment to the financial statements?
Answer: Events that provide new information about conditions that existed at the balance sheet date
Type I subsequent events provide evidence of conditions existing at the balance sheet date and require adjustment to the financial statements.
An auditor who concludes that a material uncertainty about going concern exists but management's disclosures are adequate should:
Answer: Issue an unmodified opinion with an emphasis-of-matter paragraph
When going concern disclosures are adequate, AU-C 570 requires an unmodified opinion with a separate emphasis-of-matter paragraph drawing attention to the uncertainty.