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Total 1025 questions
AICPA CPA Auditing and Attestation CPA Exam Practice Test
Question 1
In obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to:
Answer : D
Choice 'd' is correct. When obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to search for significant deficiencies in the operation of internal control.
Choice 'a' is incorrect. In order to determine the nature, timing and extent of tests to be performed, an auditor must determine whether the control activities have been implemented.
Choice 'b' is incorrect. An auditor is required to perform procedures to confirm his/her understanding of the internal control systems' design, and to determine whether relevant controls have been implemented.
Choice 'c' is incorrect. An auditor is required to document his or her understanding of the entity's internal control components, even if he or she intends to use a substantive approach.
Question 2
Stratified mean per unit (MPU) sampling is a statistical technique that may be more efficient than unstratified MPU because it usually:
Answer : B
Choice 'b' is correct. A stratified sample generally is more efficient than an unstratified sample since the population is classified in a manner that emphasizes the higher dollar value items. The result is an estimate having a desired level of precision with a smaller sample size.
Choice 'a' is incorrect. Both stratified and unstratified MPU may be used for populations where many monetary errors are expected to occur.
Choice 'c' is incorrect. Stratified sampling reduces the variability among items in a stratum.
Choice 'd' is incorrect. Standard deviations measure variability, and stratification would tend to reduce the strata standard deviations as compared to the overall standard deviation of the population.
Question 3
When planning a sample for a substantive test of details, an auditor should consider tolerable misstatement for the sample. This consideration should:
Answer : C
Choice 'c' is correct. Tolerable misstatement is the maximum monetary misstatement in an account balance that may exist without causing the financial statements to be materially misstateD. Tolerable misstatement is a planning concept related to the auditor's preliminary judgments about materiality levels.
Choice 'a' is incorrect. The auditor's overall business risk is not related to the tolerable misstatement used in planning a sample for a substantive test of details.
Choice 'b' is incorrect. The tolerable misstatement should be adjusted for both qualitative and quantitative factors.
Choice 'd' is incorrect. The auditor should modify his or her consideration of tolerable misstatement if, during the audit process, information used to determine the initial level of tolerable misstatement changes.
Question 4
A principal advantage of statistical methods of attribute sampling over nonstatistical methods is that they provide a scientific basis for planning the:
Answer : D
Choice 'd' is correct. A principal advantage of statistical methods of attribute sampling over nonstatistical methods is that they provide a scientific basis for planning the sample size.
Choices 'a', 'b', and 'c' are incorrect. The risk of overreliance, the tolerable rate, and the expected population deviation rate are factors considered in determining a statistical sample size.
Question 5
During consideration of internal control in a financial statement audit, an auditor is not obligated to:
Answer : A
Choice 'a' is correct. During consideration of internal control in a financial statement audit, an auditor is not obligated to search for all significant deficiencies in the operation of internal control, but should communicate any such situations noted to management and those charged with governance.
Choice 'b' is incorrect. The auditor is required to obtain an understanding of each of the five components of internal control, including the control environment and the (accounting) information system.
Choices 'c' and 'd' are incorrect. As part of planning, the auditor is required to obtain an understanding of the design of relevant controls and to determine whether they have been implemented.
Question 6
Should an auditor communicate the following matters to those charged with governance of a public entity?
Answer : A
Choice 'a' is correct. Unless all of those charged with governance are also involved with managing the entity, significant audit adjustments and significant matters relating to consultation with other accountants should be communicated to those charged with governance.
Choices 'b', 'c', and 'd' are incorrect, based on the above Explanation: .
Question 7
Which of the following matters is an auditor required to communicate to those charged with governance?
Answer : A
Choice 'a' is correct. Yes - Yes. Unless all of those charged with governance are also involved with managing the entity, the auditor is required to communicate significant audit adjustments. The auditor is always required to communicate changes in significant accounting policies.
Choices 'b', 'c', and 'd' are incorrect, based on the above Explanation: .
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