Certified Public Accountant Quality Control & Assurance 2

Question 1

Under SQCS No. 8, which element of a firm's quality control system addresses the acceptance and continuance of client relationships?

Accepted Answer

Acceptance and continuance of client relationships and specific engagements

Answer

SQCS No. 8 identifies acceptance and continuance of client relationships and specific engagements as a distinct quality control element.

Question 2

A CPA firm's monitoring procedures reveal that several audit files lack required supervisory review sign-offs. The firm should FIRST:

Accepted Answer

Identify the root cause and remediate deficiencies in affected engagements

Answer

When monitoring reveals deficiencies, the firm must understand the cause and take corrective action, including reassessing whether prior reports are appropriate.

Question 3

Which statement best describes the purpose of an engagement quality control review (EQCR)?

Accepted Answer

To provide an objective evaluation of significant judgments made by the engagement team

Answer

An EQCR is designed to provide an objective second review of significant judgments before the report is issued.

Question 4

Under PCAOB standards, an engagement quality reviewer for a public company audit must have which characteristic?

Accepted Answer

Must not have participated in the engagement during the period under review

Answer

The PCAOB requires that the engagement quality reviewer be independent of the engagement, meaning they did not participate in the audit being reviewed.

Question 5

A firm's quality control policy requires that all new audit clients be assessed for integrity. Which procedure best fulfills this requirement?

Accepted Answer

Contacting predecessor auditors and reviewing publicly available information about management

Answer

Assessing client integrity typically involves communicating with the predecessor auditor and reviewing public records about management's reputation.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Quality Control & Assurance 2