CAT Auditing Principles & Procedures 2

Question 1

Which type of audit opinion is issued when the auditor concludes that the financial statements are fairly presented but includes an explanatory paragraph highlighting a significant uncertainty?

Accepted Answer

Unmodified opinion with emphasis-of-matter paragraph

Answer

An unmodified (clean) opinion with an emphasis-of-matter paragraph is used when statements are fairly presented but the auditor wants to draw attention to a significant matter such as a going concern uncertainty.

Question 2

When an auditor uses the work of a component auditor in a group audit, what is the primary responsibility of the group auditor?

Accepted Answer

The group auditor bears sole responsibility for the group audit opinion

Answer

The group engagement partner is responsible for the direction, supervision, and performance of the group audit engagement and for the auditor's report on the group financial statements.

Question 3

The concept of 'professional skepticism' in auditing requires the auditor to:

Accepted Answer

Maintain a questioning mind and critically assess audit evidence

Answer

Professional skepticism means the auditor maintains an alert, questioning attitude and critically evaluates audit evidence rather than defaulting to trust or distrust.

Question 4

Which procedure would an auditor most likely perform to test the completeness assertion for accounts payable?

Accepted Answer

Review subsequent cash disbursements after year-end

Answer

Reviewing subsequent disbursements helps identify payments made after year-end for goods or services received before year-end that may not have been recorded, addressing completeness.

Question 5

An auditor discovers that the client's bookkeeper both writes checks and reconciles the bank account. This situation represents a deficiency in:

Accepted Answer

Segregation of duties

Answer

Segregation of duties requires that custody, recording, and authorization functions be performed by different individuals; combining check-writing and bank reconciliation in one person eliminates a key control.

(CAT) Certified Accounting Technician Practice Test

(CAT) Certified Accounting Technician Practice Test

CAT Auditing Principles & Procedures 2