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Regulatory Compliance & Standards Flashcards

7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Compliance & Standards flashcards as text

  1. A CPA issues a review report on interim financial statements for a public company under AS 4105. This engagement provides what level of assurance?

    Answer: Negative (limited) assurance

    A review of interim financial statements provides negative (limited) assurance, stating that the auditor is not aware of material modifications needed.

  2. Under the AICPA's Statements on Standards for Tax Services (SSTSs), when may a CPA rely on information provided by a client without verification?

    Answer: When the information appears reasonable and the CPA has no reason to doubt it

    SSTS No. 3 allows CPAs to rely on client-provided data that appears reasonable without independent verification unless there is reason to doubt its accuracy.

  3. Which PCAOB standard addresses the auditor's responsibilities for fraud in a financial statement audit?

    Answer: AS 2401

    PCAOB AS 2401 (Consideration of Fraud in a Financial Statement Audit) establishes requirements for identifying and responding to fraud risks.

  4. Under ERISA, a CPA auditing an employee benefit plan is required to perform the audit in accordance with:

    Answer: DOL audit requirements and GAAS

    ERISA audits of employee benefit plans must comply with DOL regulations and GAAS (Department of Labor audit requirements and Generally Accepted Auditing Standards).

  5. When a CPA firm rotates the lead engagement partner for a public company audit, SOX requires this rotation to occur at least every:

    Answer: 5 years

    SOX Section 203 requires mandatory rotation of the lead audit partner and the concurring review partner every 5 years.

  6. Under ASC 606 (Revenue from Contracts with Customers), at what point is revenue recognized?

    Answer: When the entity satisfies a performance obligation by transferring control of promised goods or services

    ASC 606 requires revenue to be recognized when (or as) a performance obligation is satisfied by transferring control to the customer.

  7. The 'engagement quality review' required by PCAOB AS 2101 for public company audits must be performed by:

    Answer: A reviewer who has not participated in the engagement

    AS 2101 requires the engagement quality review to be performed by an objective reviewer who did not participate in the audit engagement.