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Auditing and Attestation Flashcards

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

Read the first 7 Auditing and Attestation flashcards as text

  1. An auditor discovers that a client's internal control over cash disbursements is weak. Which audit response is most appropriate?

    Answer: Increase substantive testing over cash disbursements

    When control risk is assessed as high, auditors compensate by performing more extensive substantive procedures in the affected area.

  2. Which type of analytical procedure compares current-year financial ratios to prior-year ratios and industry benchmarks?

    Answer: Ratio analysis

    Ratio analysis evaluates relationships between financial statement items and compares them to historical data and industry norms to identify unusual fluctuations.

  3. Under PCAOB standards, an integrated audit requires the auditor to express opinions on which two items?

    Answer: Financial statements and internal control over financial reporting

    PCAOB AS 2201 requires auditors of public companies to opine on both the financial statements and the effectiveness of internal control over financial reporting.

  4. When an auditor is unable to obtain sufficient appropriate audit evidence about a material account balance, the appropriate audit report modification is:

    Answer: Qualified opinion or disclaimer of opinion

    A scope limitation that is material but not pervasive results in a qualified opinion; if pervasive, the auditor issues a disclaimer of opinion.

  5. Which sampling method gives every item in a population an equal and nonzero chance of selection?

    Answer: Random sampling

    Random sampling (probabilistic) ensures each population item has an equal chance of selection, supporting valid statistical inference.

  6. The concept of 'audit risk' is best described as the risk that:

    Answer: The auditor expresses an inappropriate opinion on materially misstated financial statements

    Audit risk is the risk that the auditor issues an unmodified opinion when the financial statements are materially misstated.

  7. A predecessor auditor's working papers may be reviewed by a successor auditor primarily to obtain information about:

    Answer: Significant accounting policies and prior audit findings

    Successor auditors review predecessor working papers to understand prior-year audit scope, significant accounting policies, and issues that may affect current-year work.