AICPA Auditing and Attestation 3

Question 1

Which condition must exist for an auditor to issue a going concern explanatory paragraph in an otherwise unmodified opinion?

Accepted Answer

Substantial doubt about the entity's ability to continue as a going concern

Answer

Under AU-C 570, if substantial doubt about going concern exists after considering management's plans, the auditor adds an explanatory paragraph to the audit report.

Question 2

What is the primary purpose of a management representation letter?

Accepted Answer

To obtain written confirmation of management's oral representations and acknowledge their responsibilities

Answer

The management representation letter confirms oral statements made during the audit and reminds management of their responsibility for the financial statements and disclosures.

Question 3

Under attestation standards, a practitioner performing a review of prospective financial statements should issue a:

Accepted Answer

Report expressing limited assurance that no material modifications are needed

Answer

A review of prospective financial statements provides limited (negative) assurance, concluding that nothing came to the practitioner's attention indicating the statements are not presented in conformity with AICPA guidelines.

Question 4

Attribute sampling is most commonly used by auditors to:

Accepted Answer

Test the operating effectiveness of internal controls

Answer

Attribute sampling estimates the rate of deviation (exception rate) in a population to test whether controls are operating effectively.

Question 5

Which of the following best describes 'significant deficiency' in internal control?

Accepted Answer

A deficiency less severe than a material weakness but important enough to merit attention by those charged with governance

Answer

A significant deficiency is less severe than a material weakness but significant enough that those charged with governance should be informed.

(AICPA) American Institute of Certified Public Accountants Practice Test

(AICPA) American Institute of Certified Public Accountants Practice Test

AICPA Auditing and Attestation 3