Exam 1: CPA Auditing and Attestation Exam

Comfort letters ordinarily are:

Mead, CPA, had substantial doubt about Tech Co.'s ability to continue as a going concern when reporting on Tech's audited financial statements for the year ended June 30, 19X4. That doubt has been removed in 19X5. What is Mead's reporting responsibility if Tech is presenting its financial statements for the year ended June 30, 19X5, on a comparative basis with those of 19X4?

In using the work of a specialist, an auditor referred to the specialist's findings in the auditor's report. This would be an appropriate reporting practice if the:

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 An entity changes its depreciation method for production equipment from the straight-line to a units-of production method based on hours of utilization. The auditor concurs with the change although it has a material effect on the comparability of the entity's financial statements. List B Report Modifications

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying analytical procedures and:

An auditor who is testing IT controls in a payroll system would most likely use test data that contain conditions such as:

Samples to test internal control are intended to provide a basis for an auditor to conclude whether:

Miller, CPA, is engaged to compile the financial statements of Web Co., a nonissuer, in conformity with the income tax basis of accounting. If Web's financial statements do not disclose the basis of accounting used, Miller should:

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. During the year under audit, we were advised that management consulted with Better & Best, CPAs. The purpose of this consultation was to obtain another CPA firm's opinion concerning the company's recognition of certain revenue that we believe should be deferred to future periods. Better & Best's opinion was consistent with our opinion, so management did not recognize the revenue in the current year.

When engaged to express an opinion on a nonissuer's internal control, an accountant should:

Which of the following statements is correct concerning statistical sampling in tests of controls?

Which of the following procedures would an auditor most likely perform during an audit engagement's overall review stage in formulating an opinion on an entity's financial statements?

Does an auditor make the following representations explicitly or implicitly when issuing the standard auditor's report on comparative financial statements?

Which of the following are true regarding communication requirements an auditor must follow when providing tax services to an audit client who is an issuer under the Sarbanes-Oxley Act of 2002?

An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to:

It is not appropriate to refer a reader of an auditor's report to a financial statement footnote for details concerning:

Proper segregation of duties reduces the opportunities to allow any employee to be in a position to both:

When a CPA reports on audited financial statements prepared on the cash receipts and disbursements basis of accounting, the report should:

Which of the following factors most likely would influence an auditor's determination of the auditability of an entity's financial statements?