Professional Standards & Competencies Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Professional Standards & Competencies flashcards as text
Which type of audit opinion is issued when financial statements contain a material but not pervasive misstatement?
Answer: Qualified opinion
A qualified opinion ('except for') is used when a misstatement or scope limitation is material but not pervasive enough to require an adverse or disclaimer.
A CPA who simultaneously holds a financial interest in a client and audits that client violates which AICPA Rule?
Answer: Rule 101 — Independence
Rule 101 (ET Section 1.200) prohibits a CPA from having a direct financial interest in an attest client.
The concept of 'professional skepticism' in auditing means the auditor should:
Answer: Maintain a questioning mind and critically assess audit evidence
Professional skepticism involves a questioning mind and critical assessment of evidence without assuming dishonesty or unquestioned honesty.
Under PCAOB AS 2201, an auditor's report on internal control over financial reporting must be based on:
Answer: An integrated audit performed alongside the financial statement audit
AS 2201 requires an integrated audit of both ICFR and the financial statements for public companies subject to SOX Section 404(b).
A CPA in public practice who prepares tax returns must comply with which standard when determining a return position?
Answer: Statements on Standards for Tax Services (SSTSs)
The AICPA's Statements on Standards for Tax Services govern tax return preparation and advice by CPA members.
Which element is NOT required in an engagement letter for an audit of a nonpublic entity?
Answer: The expected audit fee
AU-C Section 210 requires engagement letter content on objectives, scope, responsibilities, and limitations — fee is good practice but not mandated by the standard.
The AICPA's Conceptual Framework for Independence uses a 'reasonable and informed third party' test. This party is best described as:
Answer: A knowledgeable person who weighs facts and circumstances objectively
The reasonable and informed third party is a hypothetical objective person aware of relevant information who would assess whether independence is maintained.