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
Under AU-C 265, which parties must an auditor communicate identified material weaknesses in internal control to?
Answer: Management and those charged with governance
AU-C 265 requires the auditor to communicate material weaknesses in writing to both management and those charged with governance.
Which of the following is an example of a substantive analytical procedure?
Answer: Comparing commission expense as a percentage of sales to the prior year
Substantive analytical procedures evaluate the plausibility of recorded amounts by comparing ratios or trends to expectations, such as comparing commission percentages across periods.
A CPA firm that audits a public company client and also provides bookkeeping services for the same client has most likely violated which independence principle?
Answer: Management functions threat under independence rules
Providing bookkeeping or accounting services for an audit client creates a management functions/self-review threat that impairs auditor independence under PCAOB and SEC rules.
Which assertion is most directly tested when an auditor confirms accounts receivable with customers?
Answer: Existence
Confirming receivables with customers directly tests whether the recorded balances actually exist—that the customer acknowledges owing the amount.
Under GAAS, the standard of 'due professional care' requires that an auditor:
Answer: Exercise the skill and diligence of a reasonably competent auditor
Due professional care requires auditors to exercise the same care and skill expected of a reasonably competent professional—not perfection or a guarantee.
An auditor performing a review engagement under SSARS provides:
Answer: Limited assurance based primarily on inquiry and analytical procedures
A review under SSARS provides limited (negative) assurance through inquiry and analytics, concluding whether anything came to the accountant's attention indicating departures from the applicable framework.
Which condition would most likely cause an auditor to withdraw from an engagement before completion?
Answer: Discovery that management has been systematically falsifying records and is unwilling to correct them
Pervasive management fraud combined with unwillingness to correct misstatements eliminates the auditor's ability to rely on management representations, often necessitating withdrawal.