Certified Public Accountant (CPA) Audit 2

Question 1

Under AU-C 315, which procedure is specifically designed to help the auditor understand the entity's internal control?

Accepted Answer

Inquiry of management and those charged with governance

Answer

AU-C 315 requires inquiries of management and others to help the auditor understand internal control design and implementation.

Question 2

Which of the following best describes 'detection risk' in an audit?

Accepted Answer

The risk that auditor procedures fail to detect an existing material misstatement

Answer

Detection risk is the risk that the auditor's own procedures will not detect a material misstatement that actually exists.

Question 3

A CPA firm is auditing a client where the audit partner's spouse owns 15% of the client's outstanding stock. This situation most likely results in:

Accepted Answer

Impaired independence requiring the firm to withdraw

Answer

A direct financial interest of a covered person's immediate family member in an audit client impairs independence, requiring the firm to withdraw or divest.

Question 4

When an auditor uses the work of a specialist, the auditor should:

Accepted Answer

Evaluate the specialist's qualifications and the reasonableness of their findings

Answer

The auditor must assess the specialist's competence, objectivity, and whether their findings are reasonable and consistent with audit evidence.

Question 5

Which sampling method gives every item in the population an equal chance of selection?

Accepted Answer

Simple random sampling

Answer

Simple random sampling ensures every item in the population has an equal and independent probability of being selected.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant (CPA) Audit 2