(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 best describes the concept of 'professional skepticism' as required by auditing standards?
Answer: A questioning mind and critical assessment of audit evidence
Professional skepticism requires an attitude that includes a questioning mind and critical assessment of whether evidence is sufficient and whether conditions indicate fraud.
When the auditor identifies a material misstatement that management refuses to correct, the auditor should issue:
Answer: An adverse or qualified opinion depending on the pervasiveness of the misstatement
An uncorrected material misstatement leads to a qualified opinion if the effect is material but not pervasive, or an adverse opinion if the effect is both material and pervasive.
The concept of 'tolerable misstatement' in audit sampling relates most directly to:
Answer: The maximum error in a population the auditor will accept
Tolerable misstatement is the maximum monetary error in an account balance or class that the auditor is willing to accept and still conclude the balance is not materially misstated.
During an audit, the auditor discovers that management may have committed fraud. According to AU-C 240, the auditor's immediate responsibility is to:
Answer: Communicate the matter to the appropriate level of management or those charged with governance
AU-C 240 requires the auditor to communicate suspected fraud to the appropriate level of management (above those involved) and potentially to those charged with governance.
Which of the following is the most reliable form of audit evidence for verifying the existence of a long-term investment in marketable securities?
Answer: A broker's confirmation of the securities held
Confirmation from a third-party broker independently verifies the existence of securities, making it highly reliable external evidence.
In a review engagement under SSARS, the accountant's procedures are primarily limited to:
Answer: Inquiries and analytical procedures
A review under SSARS consists primarily of inquiries of management and analytical procedures, providing limited assurance rather than reasonable assurance.
When performing a group audit, the group engagement team's responsibility regarding component auditors is to:
Answer: Direct, supervise, and evaluate the work of component auditors
The group engagement team must direct, supervise, and evaluate the work performed by component auditors to obtain sufficient appropriate evidence for the group audit opinion.