Quality Control & Assurance 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 Quality Control & Assurance flashcards as text
A PCAOB inspection report identifies a quality control criticism related to audit documentation. The registered firm's response should be submitted within:
Answer: 60 days of the report's issuance
Firms have 60 days to respond to PCAOB inspection report criticisms and describe their remediation plans.
Which of the following BEST illustrates a 'systemic' quality control deficiency versus an 'isolated' one?
Answer: Multiple engagement teams across different offices consistently failed to test IT general controls
A systemic deficiency affects multiple engagements or teams, suggesting a flaw in firm-wide policies or training, unlike an isolated lapse by one individual.
Under SQCS No. 8, the 'engagement performance' element requires firms to establish policies for all of the following EXCEPT:
Answer: Setting audit fees for new clients
Fee-setting is a firm business decision, not a component of the engagement performance quality control element.
A staff auditor disagrees with the engagement manager's conclusion on a going-concern matter. Under quality control standards, the staff auditor should:
Answer: Raise the disagreement through the firm's established consultation or differences-of-opinion procedures
Firms must have policies allowing personnel to escalate differences of opinion without fear of reprisal, ensuring significant disagreements are resolved properly.
Which of the following would MOST likely be included in a CPA firm's annual quality control report issued to partners?
Answer: Summary of monitoring results, identified deficiencies, and corrective actions taken
The firm's annual quality control report to partners summarizes monitoring findings, deficiencies found, and actions taken to address them.
A firm's quality control policies require that a consultation memo be prepared when an engagement team encounters a novel revenue recognition issue. The primary purpose of this requirement is to:
Answer: Ensure complex matters are resolved with appropriate expertise and that conclusions are documented
Consultation policies ensure that difficult matters receive input from qualified personnel and that the basis for conclusions is documented in the engagement file.
Under PCAOB standards, if an engagement quality reviewer concludes that the engagement team's significant judgments are not supported, the reviewer should:
Answer: Not provide concurrence until the issues are resolved to the reviewer's satisfaction
The engagement quality reviewer must withhold concurrence if significant judgments are unsupported; the report cannot be issued until the EQCR is satisfactorily completed.