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2025 CPA AUDIT Exam Questions & Verified Answers Auditing & Attestation
Ethics, Evidence, Internal Controls AICPA Blueprint Becker-Based Graded A+
the |primary |objective |of |an |auditor |when |considering |the |acceptance |of |an |initial |audit |engagement | of |a |nonissuer |is |to: a) |establish |whether |the |preconditions |for |an |audit |are |present b) |agree |w |mgt |on |timing |the |tests |at |interim c) |limit |the |auditor's |responsibility |if |mgt |fails |to |provide |written |representations d) |specify |the |degree |to |which |mgt |intends |to |rely |on |the |auditor's |testing |of |internal |ctrls |- | answersestablish |whether |the |preconditions |for |an |audit |are |present an |auditor |is |testing |a |client's |pension |benefit |obligation. |which |of |the |following |types |of |evidence | would |be |most |appropriate |for |determining |that |the |financial |statement |balance |is |fairly |stated? a) |client |prepared |schedule |showing |accounting |entries |made |to |the |GL |balance b) |an |actuarial |valuation |obtained |by |an |outside |firm c) |confirmation |of |pmts |received |by |the |retirees d) |analytical |procedures |that |compare |last |year's |balance |to |this |year's |balance |- |answersan |actuarial | valuation |obtained |by |an |outside |firm |because |it |calculates |fair |value |of |the |obligation which |of |the |following |would |provide |an |auditor |of |a |nonissuer |with |the |best |evidence |of |fair |value | pertaining |to |a |client's |investments |in |derivative |instruments |that |are |listed |on |a |national |exchange | and |disclosed |at |fair |value? a) |client's |personnel |who |trade |the |derivative b) |quoted |market |prices c) |docs |related |to |the |original |purchase |of |the |derivative | d) |estimates |of |fair |value |provided |by |broker |dealers |- |answersquoted |market |prices |since |it |is |on |a | national |exchange which |of |the |following |qualitative |factors |would |an |auditor |consider |most |relevant |to |the | consideration |of |whether |a |discovered |misstatement |is |material? a) |audit |team |found |a |mistmt |that |if |recorded |affects |the |client's |compliance |with |loan |covenants b) |audit |team |found |one |mistmt |due |to |an |error c) |audit |team |found |a |miscalculation |in |the |client's |tax |filing |that |does |not |affect |the |client's |current | FS |but |has |the |effect |of |increasing |its |tax |liability |in |the |future
d) |the |co |recently |emerged |from |bankruptcy |after |receiving |addtl |bank |financing |- |answersA |is |correct |because |if |the |mistmt |was |recorded |it |affects |the |client's |compliance |with |loan |convenants if, |while |performing |a |review |engagement, |an |accountant |has |reason |to |believe |that |a |material | misappropriation |of |assets |might |have |occurred, |what |should |the |accountant |do? a) |assess |whether |controls |are |in |place |to |deter |similar |misappropriations b) |require |an |investigation |to |determine |whether |the |misappropriation |actually |occurred c) |disclose |the |potential |misappropriation |as |supplementary |info |in |the |accountant's |report d) |document |communications |with |senior |mgt |about |the |matter |- |answersD |is |correct in |the |integrated |audit |of |an |issuer, |an |auditor |has |identified |entity- |level |controls |that |are |important | to |the |conclusion |as |to |whether |the |company |has |effective |internal |control |over |financial |reporting. | each |of |the |following |is |an |example |of |an |entity- |level |control, |except: a) |controls |over |the |period |end |financial |reporting |process b) |co's |risk |assessment |process c) |controls |over |the |completeness |of |deposited |cash d) |controls |over |mgt |override |- |answerscontrols |over |the |completeness |of |deposited |cash |relates |to | controls |at |the |account |level which |of |the |following |is |a |complete |and |accurate |list |of |the |walkthrough |procedures |usually | performed |in |an |issuer's |integrated |audit? a) |inquiry, |observation, |analytical |procedures, |TOC b) |inquiry, |sampling, |analytical |procedures, |TOC c) |inquiry, |observation, |inspection |of |relevant |documentation, |and |reperformance |of |controls d) |inquiry, |inspection |of |relevant |documentation, |sampling, |and |reperformance |of |controls |- | answersinquiry, |observation, |inspection |of |relevant |documentation, |and |reperformance |of |controls an |overall |response |to |address |a |high-assessed |risk |of |material |misstatement |at |the |financial | statement |level |of |a |nonissuer |may |include: a) |increasing |reliance |on |results |on |internal |control |testing b) |emphasizing |the |need |for |more |accounting |staff c) |incorporating |addtl |predictability |into |the |selection |of |procedures d) |providing |more |supervision |of |the |audit |team |- |answersproviding |more |supervision |of |the |audit | team which |of |the |following |factors |would |the |auditor |not |explicitly |consider |when |determining |sample |size |in |an |attribute |sample |for |test |of |controls?
what |is |the |reason |for |asset |turnover |in |the |industry |(1.12) |and |company |(1.52)? |- |answerssales |are | potentially |overstated what |is |the |reason |for |return |on |assets |in |the |industry |(0.12) |and |company |(0.08)? |- |answersexpenses |are |overstated |for |year | 2 what |is |the |reason |for |profit |margin |in |the |industry |(0.05) |and |company |(0.09)? |- |answersthe | warranty |reserve |is |understated |for |year | 2 what |is |the |reason |for |time |interest |earned |in |the |industry |(5.50) |and |company |(3.20)? |- |answersthe | company |has |a |poorer |credit |rating |than |its |competitors if |the |business |environment |is |experiencing |a |recession, |the |auditor |would |most |likely |focus |increased |attention |on |which |accounts? a) |common |stock b) |purchase |returns |and |allowance c)allowance |for |doubtful |accounts d)noncontrolling |interest |of |a |subsidiary |purchased |during |the |year |- |answersallowance |for |doubtful | accounts |because |customers |will |default |on |payments |owed in |using |the |work |of |a |specialist, |an |auditor |of |a |nonissuer |may |refer |to |the |specialist |in |the |auditor's | report |if, |as |a |specialist's |findings, |the |auditor, | a) |modifies |the |opinion b) |desires |to |disclose |the |specialist's |findings, |which |imply |that |a |more |thorough |audit |was |performed c) |is |able |to |corroborate |another |specialist's |earlier |findings |that |were |consistent |with |mgt's |rep d) |discovers |significant |deficiencies |in |the |design |of |the |entity's |internal |control |- |answersmodifies |the |opinion |because |the |auditor |may |need |permission |to |make |this |reference an |auditor |uses |substantive |analytical |procedures |as |a |primary |means |to |test |a |FS |assertion. |while | performing |the |analytical |procedures, |the |auditor |is |required |to |document |all |the |following |with | exception |of |which |item? a) |any |additional |audit |procedures |performed |in |response |to |significant |unexplained |variances b) |auditor's |expectation c) |results |of |the |comparison |of |the |expectation |to |the |client's |recorded |amounts d) |a |comparison |of |the |results |obtained |from |the |current |year's |audit |to |the |prior |year's |audit |- | answersthe |auditor |is |not |required |to |document |the |comparison |of |the |results |obtained |from |the | current |year's |audit |to |the |prior |year's |audit a |successor |auditor |is |require |to |attempt |communication |with |the |predecessor |auditor |prior |to a) |accepting |the |eng
b) |making |a |proposal |for |the |audit |engagement c) |performing |TOC d) |testing |beg |bal |for |CY |- |answersaccepting |the |eng which |of |the |following |most |likely |would |cause |an |auditor |to |suspect |an |employee |payroll |fraud | scheme? a) |separate |payroll |bank |acc |is |maintained |on |an |imprest |basis b)payroll |checks |are |disbursed |by |the |same |employee |each |payday c)employee |time |cards |are |approved |by |individual |dpt |supervisors d) |there |are |significant |unexplained |variances |between |std |and |actual |labor |cost |- |answerssig | unexplained |variances |may |cause |the |auditor |to |suspect |an |employee |payroll |fraud |scheme which |of |the |following |would |not |have |a |direct |impact |in |determining |the |sufficiency |of |evidence | gathered |during |an |audit? a) |RMM b) |quality |of |audit |evid |obtained c) |cost-benefit |relationship |of |obtaining |the |audit |evid d) |auditor's |prof |judgement |- |answerscost-benefit |relationship |does |not |directly |impact |the |sufficiency |of |evidence |gathered which |of |the |following |entity- |level |ctrls |is |specifically |identified |in |the |professional |stds |as |a |ctrl |of | importance |that |should |be |evaluated a) |period |end |financial |rep |ctrls b) |risk |mgt |policies c) |centralized |processing |ctrls d) |monitoring |of |ctrls |- |answersperiod- |end |fin |reporting |ctrls to |reduce |risks |associated |with |accepting |fax |responses |to |requests |for |confirmations |of |AR, |an | auditor |most |likely |would a) |consider |faxes |to |be |nonresponses |and |evaluate |them |as |unadjusted |diff b) |examine |the |shipping |docs |that |provide |evidence |for |the |existence |assertion c) |verify |the |sources |and |contents |of |the |faxes |in |telephone |calls |to |the |senders d) |inspect |faxes |for |forgeries |or |altercations |and |consider |them |to |be |acceptable |if |none |are |noted |- | answersthe |auditor |is |likely |to |call |the |senders |to |verify |the |sources |and |contents |so |C |is |correct which |of |the |following |procedures |would |an |auditor |most |likely |perform |to |identify |unusual |sales | transactions?
a) |an |auditor's |best |est, |before |performing |audit |procedures, |of |mistmts |that |the |auditor |expects |to | find |during |the |audit b) |the |only |amt |that |the |auditor |considers |in |evaluating |materiality |and |fairness |of |the |FS c) |auditor's |best |est |of |mistmts |in |a |population |extrapolated |from |mistmts |identified |in |an |audit | sample d) |the |likly |amt |of |mistmt |in |the |subsequent |period's |FS |if |a |ctrl |is |not |properly |implemented |- | answersauditor's |best |est |of |mistmts |in |a |population |extrapolated |from |mistmt |identified |in |an |audit | sample which |of |the |following |procedures, |if |used |should |be |combined |with |other |audit |procedures |when | testing |the |operating |effectiveness |of |ctrls? a) |inquiry b) |inspection c) |reperformance d) |observation |- |answersinquiry in |planning |an |audit |of |a |new |client, |an |auditor |most |likely |would |consider |the |methods |used |to | process |accounting |info |because |such |methods a) |assist |in |evaluating |planned |audit |obj b) |affect |the |auditor's |preliminary |judgement |about |materiality |levels c) |influence |the |design |of |internal |ctl d) |determine |the |auditor's |acceptable |level |of |audit |risk |- |answersconsider |methods |that |influence | the |design |of |internal |control all |of |the |following |would |be |associated |with |fraud |risk |in |the |revenue |cycle, |except |for a) |materiality |understanding |the |allowance |for |uncollectible |accounts b) |holding |the |co's |books |open |past |the |close |of |the |accounting |period c) |recording |revenue |on |trial |sales |after |the |consignment |period |to |the |customer |expires d) |failure |to |record |sales |(product) |returns |by |customers |on |a |timely |basis |- |answersrecording | revenue |on |trial |sales |products |issued |on |consignment |basis |should |only |be |done |after |the | consignment |period |expires all |of |the |following |are |ways |to |prevent |or |detect |lapping, |except |for a) |require |customers |to |send |pmts |directly |to |a |lock |box b) |compare |dollar |amts |and |dates |on |the |bank |deposit |slips |with |customer |remittance |credits |entered |into |the |AR |ledger
c) |independently |compare |recorded |cash |receipts |with |funds |actually |deposited |in |the |bank d) |prepare |a |bank |transfer |schedule |- |answerspreparing |a |bank |transfer |schedule |is |an |effective | means |to |detect |kiting |not |lapping which |of |the |following |is |true |about |the |assurance |provided |by |special |reports? a) |a |positive |opinion |may |be |rendered |in |some |types |of |special |reports b) |all |special |reports |may |result |in |positive |assurance c) |all |special |reports |result |in |negative |assurance d) |a |list |of |procedures |and |findings |(but |no |assurance) |is |provided |in |some |special |reports |- | answerspositive |opinion |may |be |rendered |in |some |types |of |special |reports how |should |differences |of |opinion |between |the |eng |partner |and |QC |reviewer |be |resolved? a) |issue |a |disclaimer |and |report |the |issue |to |those |charged |with |the |entity's |governance b) |follow |the |firm's |policies |and |procedures c) |adhere |to |industry |best |practices d) |accept |the |recommendations |of |the |client's |audit |committee |- |answersfollow |the |firm's |policies | and |procedures which |of |the |following |procedures |most |likely |would |not |be |included |in |a |review |engagement |of |a | nonissuer? a) |inquire |about |sub |events b) |consider |whether |FS |conform |with |GAAP c) |assess |CR d) |obtain |mgt |rep |letter |- |answersnot |req |to |assess |CR |as |part |of |a |review "our |audit |is |subj |to |the |IR |that |material |errors |and |fraud, |including |defalcations, |if |they |exist, |will |not |be |detected. |however, |we |will |inform |you |of |fraud |that |comes |to |our |attention, |unless |it |is | inconsequential." |this |passage |is |from a) |rep |letter b) |eng |letter c) |letter |of |audit |inq d) |comfort |letter |- |answerseng |letter |includes |auditor's |resp |and |the |limitations |of |the |eng an |auditor |wishes |to |perform |TOC |on |a |client's |cash |disbursements |procedures. |if |the |control | activities |leave |no |audit |trail |of |documentary |evidence, |the |auditor |most |likely |will |test |the | procedures |by: a) |confirmation |and |obv
b) |client's |evaluation |of |materiality c) |the |dollar |amt |of |key |figures |in |the |previous |years' |FS d) |nature |of |an |item, |such |as |illegal |but |very |small |payment |- |answersthe |auditor |cannot |share | judgement |responsibility |with |the |client, |so |B |is |correct to |which |of |the |following |matters |would |an |auditor |not |apply |materiality |limits |when |obtaining | specific |written |client |rep? a) |fraud |involving |employees |with |significant |roles |in |the |internal |control |structure b) |assumptions |used |in |accounting |estimates c) |the |absense |of |errors |and |unrecorded |transactions |in |FS d) |disclosure |of |compensating |balance |arrangements |involving |restrictions |on |cash |balances |- | answersauditor |would |not |apply |materiality |limits |to |fraud |because |even |fraud |that |causes |an | immaterial |effect |on |the |FS |may |have |serious |implications |with |respect |to |the |integrity |of |the | employees |involved which |of |the |following |is |not |true |about |an |audit |of |inventory? a) |examining |paid |vendor |invoices |provides |evidence |about |both |the |rights |and |obligations |assertion | and |the |valuation |and |allocation |assertion b) |observing |physical |inventory |counts |provides |evidence |about |the |existence |and |completeness | assertions c) |obtaining |inventory |counts |provides |evidence |about |rights |and |obligation |assertion d) |observing |a |physical |inventory |counts |provides |evidence |about |the |existence |assertion |- | answersdoes |not |provide |evidence |about |rights |and |obligation which |of |the |following |is |the |most |likely |sequence |of |events |an |auditor |might |follow |in |considering | internal |control? a) |an |auditor |performs |TOC |first, |using |the |knowledge |obtained |from |those |tests |to |develop |an | understanding |of |internal |control b)an |auditor |performs |adtl |TOC |after |the |detailed |substantive |testing |has |been |completed |because |it | may |be |more |efficient |to |do |so c) |an |auditor |performs |TOC |at |the |same |time |that |he |or |she |is |obtaining |an |understanding |of |internal |control |because |it |may |be |more |efficient |to |do |so d) |an |auditor |performs |substantive |tests |prior |to |TOC |because |a |large |number |of |substantive |errors | may |help |the |auditor |identify |areas |of |weakness |- |answerssame |time |because |it |may |be |more | efficient |to |do |so the |risk |of |incorrect |rejection |and |the |likelihood |of |assessing |CR |too |high |relate |to |the | a) |effectiveness |of |the |audit
b) |preliminary |estimates |of |materiality |levels c) |efficiency |of |the |audit d) |allowable |risk |of |tolerable |mistmt |- |answersit |will |cause |the |auditor |to |perform |more |procedures | than |are |necessary |which |affects |audit |efficiency which |of |the |following |documents |should |be |sent |to |AP |dpt? |(y/n) a) |purchase |order b) |sales |order c) |signed |check |- |answersPO-yes SO-no SC-no in |order |to |gain |knowledge |of |a |new |client's |business |during |the |audit |planning |phase, |the |auditor | may |engage |in |several |information |gathering |activities. |which |of |the |following |is |not |one |of |those | activities? a) |review |client |policies |and |procedures |manual |to |gather |info |on |client's |accounting |processes b) |taking |a |tour |of |client's |facilities c) |review |mins |of |stockholder |and |BOD |meetings d) |perform |inquiries |with |outside |legal |counsel |to |gain |an |understanding |of |existing |lawsuits |- | answersinquiries |of |client |personnel |is |NOT |performed |during |planning |phase Which |of |the |following |would |least |likely |be |part |of |an |auditor's |procedures |with |respect |to |fair | values? a) |review |subsequent |events |occurring |after |completion |of |the |audit |for |evidence |regarding |fair |value |measurements |as |of |the |balance |sheet |date b) |evaluate |the |appropriateness |of |the |valuation |model |used |by |mgt c) |obtain |mgt |rep |relating |to |intent |and |ability |to |carry |out |planned |courses |of |action d) |develop |an |independent |fair |value |estimate |- |answersthe |auditor |would |not |continue |to |review | subsequent |events |once |the |audit |is |complete |so |A |is |correct which |of |the |following |is |true? a) |both |compilations |and |review |provide |some |form |of |assurances |for |FS b) |in |a |compilation, |only |limited |assurance |is |provided, |whereas |in |a |review, |positive |assurance |is | provided c) |both |compilations |and |reviews |require |establishment |of |an |understanding |with |the |client
d) |the |lack |of |independence |must |be |disclosed |in |the |auditor's |report |but |will |not |preclude |the | issuance |of |an |unqualified |opinion |- |answersuse |of |a |specialist |who |is |related |to |the |auditor |is | acceptable |but |objectivity |may |be |impaired |so |C |is |correct which |of |the |following |is |not |true |about |the | 5 |components |of |internal |control? a) |each |of |the |components |of |internal |ctrl |may |affect |any |of |the | 3 |overall |entity |objectives b) |components |of |int |ctrl |are |applicable |to |all |audits c) |the |auditor |is |required |to |classify |relevant |ctrls |into |one |of |the | 5 |component |categories d) |the |auditor |is |required |to |have |an |understanding |of |each |component |- |answersauditor |doesn't | have |to |classify |relevant |controls |so |C |is |correct what |is |not |true |about |major |programs? a) |subj |to |both |general |and |specific |compliance |req b) |mat |be |deemed |major |if |the |auditor |has |not |met |minimum |audit |guidelines |in |terms |of |the |% |of | coverage |of |the |audit c) |determination |of |major |programs |is |based |on |mgt |selection d) |auditor |is |required |to |report |on |compliance |and |on |internal |ctrl |over |compliance |related |to |each | major |program |- |answersmajor |programs |are |determined |by |the |auditor |using |risk |based |approach, | not |by |mgt |so |C |is |correct when |an |auditor |qualifies |an |opinion |for |a |nonissuer |due |to |the |scope |limitation, |the |auditor |should | describe |the |nature |of |the |scope |limitation |in |a |separate |paragraph |and |modify |the: |(y/n) a) |intro b) |basis |for |qualified |opin c) |opinion |- |answersintro- |NO basis- |YES opinion- |YES "this |report |is |intended |soley |for |the |info |and |use |of |BOD |and |mgt |of |X |co. |and |is |not |intended |to |be |and |should |not |be |used |by |anyone |other |than |the |specified |parties." |this |report |relates |to: a) |report |on |an |examination |of |a |financial |forecast b) |report |on |a |client's |compliance |with |regulatory |requirement, |assuming |the |report |is |prepared | based |on |a |FS |audit |of |the |complete |FS c) |a |report |on |a |specified |element |in |a |FS, |where |that |element |is |prepared |in |accordance |with |the |tax |basis |of |accounting d) |a |report |on |FS |prepared |on |the |cash |basis |of |accounting |- |answersB |is |correct
