CPA Auditing & Assurance Services 5

Question 1

A CPA firm issues a report on controls at a service organization under SSAE 18. Which report type also provides user auditors with tests of controls and results?

Accepted Answer

SOC 1 Type 2

Answer

A SOC 1 Type 2 report covers a period of time and includes both the description of controls and the service auditor's tests of operating effectiveness and results.

Question 2

Under the AICPA Code of Professional Conduct, which threat to independence arises when an auditor has a loan from an audit client?

Accepted Answer

Self-interest threat

Answer

A financial relationship such as a loan from an audit client creates a self-interest threat because the auditor has a personal financial stake in the client's outcome.

Question 3

Which audit procedure is most effective for detecting a cutoff error in sales revenue?

Accepted Answer

Comparing recorded sales to shipping documents around year-end

Answer

Comparing recorded sales to shipping documents around year-end directly tests whether revenue was recorded in the correct period.

Question 4

When an auditor issues a report on prospective financial statements that are intended for general use, which type of prospective financial statement is appropriate?

Accepted Answer

Forecast

Answer

A financial forecast, based on expected conditions and courses of action, is the only type of prospective financial statement appropriate for general use.

Question 5

Which of the following is an example of a substantive test of details rather than a substantive analytical procedure?

Accepted Answer

Vouching specific fixed asset additions to purchase invoices

Answer

Vouching specific transactions to source documents is a test of details, providing direct evidence about individual transactions.

(CPA) Certified Practicing Accountant Practice Test

(CPA) Certified Practicing Accountant Practice Test

CPA Auditing & Assurance Services 5