CPA Auditing and Attestation (AUD) : The Audit Process - Quality Control
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #1 : The Audit Process Quality Control
Sufficient evidence refers to:
Amount of evidence
Type of evidence
Quality of evidence
Approved evidence
Amount of evidence
Sufficient evidence refers to the amount of evidence. It is sufficient in quantity to enable the auditor to express a reasonable judgment.
Example Question #1 : The Audit Process Quality Control
John Anderson CPA is in the process of auditing a client. In terms of “reliability of evidence”, evidence pertaining to cash records should be obtained through:
The cashier
The controller
The bank statements
The general ledger
The bank statements
In the hierarch of evidence, evidence from independent sources is deemed most appropriate. In this scenario, the independent source of evidence is the bank statements as this document comes from an outside source (the bank).
Example Question #24 : Quality Control, Engagement Acceptance, Planning, & Internal Control
An “assertion” in terms of the financial statement includes:
Completeness
Agreeableness
Reasonableness
Cost effectiveness
Completeness
An “assertion” in terms of the financial statement includes the completeness, existence, valuation, rights and obligations, and presentation and disclosure.
Example Question #2 : The Audit Process Quality Control
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap up review of the audit documentation. This second review usually focuses on:
Fraud involving the client's management and its employees
The communication of internal control weaknesses to those charged with governance
Evaluation of the significant judgements made by the engagement team and the related conclusions reached in forming the overall conclusion
The materiality of the adjusting entries proposed by the audit staff
Evaluation of the significant judgements made by the engagement team and the related conclusions reached in forming the overall conclusion
The primary purpose of a second partner review is to evaluate the significant judgments made by the engagement team and the related conclusions reached in forming the overall conclusion.
Example Question #3 : The Audit Process Quality Control
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to:
Minimize the likelihood of associating with clients whose management lacks integrity
Enhance the auditor's understanding of the client's business and its industry
Provide reassurance that personnel are adequately trained to fulfill their responsibilities
Document the matters that are required to be communicated to the audit committee
Minimize the likelihood of associating with clients whose management lacks integrity
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to minimize the likelihood of associating with clients whose management lacks integrity.
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