CA Auditing Standards 3

Question 1

Which type of audit opinion is issued when the financial statements are presented fairly in all material respects?

Accepted Answer

Unmodified opinion

Answer

An unmodified (clean) opinion means the auditor concluded the financial statements are fairly presented in accordance with the applicable framework.

Question 2

A CPA firm's independence is impaired when a partner has a:

Accepted Answer

Direct material financial interest in an audit client

Answer

A direct material financial interest in an audit client impairs independence under both AICPA and SEC independence rules.

Question 3

Under the AICPA's risk-based audit approach, which component of the audit risk model represents the effectiveness of controls in preventing or detecting misstatements?

Accepted Answer

Control risk

Answer

Control risk is the risk that a material misstatement will not be prevented or detected on a timely basis by internal controls.

Question 4

Which document outlines the nature, timing, and extent of planned audit procedures and serves as a guide for the audit team?

Accepted Answer

Audit program

Answer

The audit program specifies the procedures to be performed, their timing, and the extent of testing planned for each audit area.

Question 5

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

Accepted Answer

Comparing current-year interest expense to prior-year balances relative to outstanding debt

Answer

Substantive analytical procedures use plausible relationships (e.g., interest expense relative to debt) to develop expectations and identify potential misstatements.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Auditing Standards 3