Most Recent AICPA CPA-Auditing Exam Questions & Answers

Prepare for the AICPA CPA Auditing and Attestation exam with our extensive collection of questions and answers. These practice Q&A are updated according to the latest syllabus, providing you with the tools needed to review and test your knowledge.

QA4Exam focus on the latest syllabus and exam objectives, our practice Q&A are designed to help you identify key topics and solidify your understanding. By focusing on the core curriculum, These Questions & Answers helps you cover all the essential topics, ensuring you're well-prepared for every section of the exam. Each question comes with a detailed explanation, offering valuable insights and helping you to learn from your mistakes. Whether you're looking to assess your progress or dive deeper into complex topics, our updated Q&A will provide the support you need to confidently approach the AICPA CPA-Auditing exam and achieve success.

The questions for CPA-Auditing were last updated on Jan 17, 2025.

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Question No. 1

An auditor should obtain knowledge of a client's information and communication system in order to understand each of the following, except:

AHow transactions are initiated, processed, and reported.

BThe process used to prepare financial statements.

CThe means used by an entity to communicate financial reporting roles to its staff.

DThe means used by an entity to ensure that management directives are carried out.
Explanation
Choice 'd' is correct. Control activities (not the information and communication system) are the policies and procedures that help ensure that management directives are carried out.
Choices 'a', 'b', and 'c' are incorrect. The auditor obtains an understanding of an entity's information and communication system to understand how transactions are initiated, processed, and reported, the financial reporting process, and the means used by an entity to communicate financial reporting roles and responsibilities.

Show Answer

Correct Answer: D

Question No. 2

This question will represent a statement, question, excerpt, or comment taken from various parts of an auditor's documentation file. Letter choices A-P represent a list of the likely sources of the statement, question, excerpt, or comment. Select, as the best answer for each item, the most likely source. Select only one source for each item.

The company believes that all material expenditures that have been deferred to future periods will be recoverable.

APractitioner's report on management's assertion about an entity's compliance with specified requirements.

BAuditor's communications on significant deficiencies in internal control.

CAudit inquiry letter to legal counsel.

DLawyer's response to audit inquiry letter.

ECommunication from those charged with governance to the auditor.

FAuditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).

GReport on the application of accounting principles.

HAuditor's engagement letter.
i. Letter for underwriters.

JAccounts receivable confirmation request.

KRequest for bank cutoff statement.

LExplanatory paragraph of an auditor's report on financial statements.

MPartner's engagement review notes.

NManagement representation letter.

OSuccessor auditor's communication with predecessor auditor.

PPredecessor auditor's communication with successor auditor.

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Correct Answer: N

Choice 'N' is correct. Management's discussion of its belief that all material expenditures that have been deferred to future periods will be recoverable provides information regarding recognition, measurement, and disclosure, and would be included in the management representation letter.

Question No. 3

This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.

Assume:

* The auditor is independent.

* The auditor previously expressed an unqualified opinion on the prior year's financial statements.

* Only single-year (not comparative) statements are presented for the current year.

* The conditions for an unqualified opinion exist unless contradicted in the factual situations.

* The conditions stated in the factual situations are material.

* No report modifications are to be made except in response to the factual situation.

Item to Be Answered

A principal auditor decides to take responsibility for the work of another CPA who audited a wholly-owned subsidiary of the entity and issued an unqualified opinion. The total assets and revenues of the subsidiary represent 17% and 18%, respectively, of the total assets and revenues of the entity being audited.

List B

Report Modifications

ADescribe the circumstances in an explanatory paragraph preceding the opinion paragraph without modifying the three standard paragraphs.

BDescribe the circumstances in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.

CDescribe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the opinion paragraph.

DDescribe the circumstances in an explanatory paragraph following the opinion paragraph and modify the opinion paragraph.

EDescribe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the scope and opinion paragraphs.

FDescribe the circumstances in an explanatory paragraph following the opinion paragraph and modify the scope and opinion paragraphs.

GDescribe the circumstances within the scope paragraph without adding an explanatory paragraph.

HDescribe the circumstances within the opinion paragraph without adding an explanatory paragraph.
i. Describe the circumstances within the scope and opinion paragraphs without adding an explanatory paragraph.

JIssue the standard auditor's report without modification.

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Correct Answer: J

Choice 'J' is the correct modification. When assuming responsibility for another auditor's work, the principal auditor should issue the standard auditor's report without modification.

Question No. 4

A weakness in internal control over recording retirements of equipment may cause an auditor to:

AInspect certain items of equipment in the plant and trace those items to the accounting records.

BReview the subsidiary ledger to ascertain whether depreciation was taken on each item of equipment during the year.

CTrace additions to the 'other assets' account to search for equipment that is still on hand but no longer being used.

DSelect certain items of equipment from the accounting records and locate them in the plant.

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Correct Answer: D

Choice 'd' is correct. Testing to see whether equipment listed in the accounting records is physically present in the plant and still in service is an effective way to test whether unrecorded disposals occurred.

Choice 'a' is incorrect. Tracing from equipment found in service to accounting records would be performed to test the completeness assertion that all equipment on hand has been recorded, rather than testing the assertion that all recorded equipment is still in service.

Choice 'b' is incorrect. Reviewing whether depreciation is still being taken would not provide evidence about unrecorded fixed asset disposals unless the auditor also performs a physical inspection of the assets being depreciated. Also, assets that are fully depreciated but still in service would not appear in depreciation records.

Choice 'c' is incorrect. Examining additions to the other assets account would not be likely to lead to discovery of unrecorded fixed asset disposals, since newer assets are not likely to have been retired.

Question No. 5

An auditor ordinarily uses a working trial balance resembling the financial statements without footnotes, but containing columns for:

ACash flow increases and decreases.

BAudit objectives and assertions.

CReclassifications and adjustments.

DReconciliations and tickmarks.

Show Answer

Correct Answer: C

Choice 'c' is correct. The working trial balance generally contains a column for adjustments and reclassifications.

Choice 'a' is incorrect. The working trial balance does not ordinarily contain information about cash flows.

Choice 'b' is incorrect. Audit objectives and assertions are contained in the audit plan, which is generally kept separate from the working trial balance.

Choice 'd' is incorrect. Reconciliations and tickmarks are found in other parts of the audit documentation.

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