AUD — Auditing & Attestation — Quiz 5

Questions in this quiz (8)

1. Which of the following is true regarding an audit engagement under GAAS?

   • The auditor provides no assurance on the financial statements.
   • The auditor provides reasonable assurance on the financial statements.
   • The auditor only performs analytical procedures.
   • The auditor does not evaluate internal controls.

2. A CPA performing an audit engagement should:

   • Only perform inquiry and analytical procedures.
   • Issue a disclaimer of assurance.
   • Obtain sufficient appropriate audit evidence to support an opinion.
   • Compile financial statements without verification.

3. A CPA conducting an audit identifies a material departure from GAAP that management refuses to correct. What is the CPA's best course of action?

   • Ignore the issue if it is disclosed in the notes.
   • Issue an unmodified opinion.
   • Modify the audit opinion.
   • Convert the engagement to a review.

4. Which of the following is true regarding independence in an audit engagement?

   • Independence is optional if disclosed.
   • Independence is required in both fact and appearance.
   • Independence is only required for public companies.
   • Independence is not required for audits.

5. A CPA performing an audit engagement becomes aware that management has omitted required disclosures. What should the CPA do?

   • Perform additional analytical procedures only.
   • Request management to include the disclosures.
   • Issue the report without changes.
   • Automatically withdraw from the engagement.

6. A CPA conducting an audit determines that sufficient appropriate audit evidence cannot be obtained for a material account balance. What is the most appropriate action?

   • Issue an unmodified opinion.
   • Issue a qualified opinion or disclaimer.
   • Ignore the limitation if immaterial.
   • Perform a compilation instead.

7. A CPA conducting an audit identifies that internal controls are weak, but no material misstatements are found. What is the CPA's best course of action?

   • Modify the audit opinion.
   • Issue an adverse opinion.
   • Communicate the deficiency to those charged with governance.
   • Withdraw from the engagement.

8. A CPA performing an audit identifies a significant related party transaction that has not been disclosed. What is the CPA's best course of action?

   • Perform analytical procedures to estimate its impact.
   • Request management to disclose the transaction.
   • Ignore it if it does not affect cash flow.
   • Issue an unmodified opinion.