AICPA Auditing and Attestation 4

Question 1

Under AU-C 265, which parties must an auditor communicate identified material weaknesses in internal control to?

Accepted Answer

Management and those charged with governance

Answer

AU-C 265 requires the auditor to communicate material weaknesses in writing to both management and those charged with governance.

Question 2

Which of the following is an example of a substantive analytical procedure?

Accepted Answer

Comparing commission expense as a percentage of sales to the prior year

Answer

Substantive analytical procedures evaluate the plausibility of recorded amounts by comparing ratios or trends to expectations, such as comparing commission percentages across periods.

Question 3

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?

Accepted Answer

Management functions threat under independence rules

Answer

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.

Question 4

Which assertion is most directly tested when an auditor confirms accounts receivable with customers?

Accepted Answer

Existence

Answer

Confirming receivables with customers directly tests whether the recorded balances actually exist—that the customer acknowledges owing the amount.

Question 5

Under GAAS, the standard of 'due professional care' requires that an auditor:

Accepted Answer

Exercise the skill and diligence of a reasonably competent auditor

Answer

Due professional care requires auditors to exercise the same care and skill expected of a reasonably competent professional—not perfection or a guarantee.

(AICPA) American Institute of Certified Public Accountants Practice Test

(AICPA) American Institute of Certified Public Accountants Practice Test

AICPA Auditing and Attestation 4