CPA Auditing and Attestation Practice Exam
Sample Questions and Answers
1. Which of the following is one of the general standards under GAAS?
A. The auditor must plan the work and properly supervise assistants.
B. The auditor must maintain an attitude of independence in mental attitude.
C. The audit must be performed with due professional care.
D. Both B and C.
Answer: D ( Both B and C. )
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2. What is the primary purpose of an auditor’s opinion in an audit engagement?
A. To detect fraud in financial statements.
B. To provide reasonable assurance that the financial statements are free from material misstatement.
C. To ensure the accuracy of financial statements.
D. To assess the efficiency of management operations.
Answer: B ( To provide reasonable assurance that the financial statements are free from material misstatement.)
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3. Which of the following is a type of attestation engagement?
A. Review engagements.
B. Compilation engagements.
C. Agreed-upon procedures.
D. Both A and C.
Answer: D ( Both A and C. )
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4. The auditor’s report explicitly states that the financial statements are:
A. Accurate.
B. Presented fairly in all material respects.
C. Certified.
D. Free from all misstatements.
Answer: B ( Presented fairly in all material respects. )
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5. Which of the following components is included in the standard audit report?
A. Auditor’s responsibilities.
B. Management’s responsibilities.
C. Scope paragraph.
D. All of the above.
Answer: D ( All of the above. )
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6. Which of the following procedures is typically performed in an attestation engagement?
A. Substantive testing.
B. Inquiry and analytical procedures.
C. Internal control testing.
D. Statistical sampling.
Answer: B ( Inquiry and analytical procedures. )
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7. Under GAAS, the auditor is required to obtain:
A. Absolute assurance.
B. Reasonable assurance.
C. Limited assurance.
D. No assurance.
Answer: B ( Reasonable assurance. )
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8. A review engagement is designed to provide:
A. Absolute assurance.
B. Negative assurance.
C. Positive assurance.
D. Reasonable assurance.
Answer: B ( Negative assurance. )
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9. What type of opinion is issued when financial statements are fairly presented except for a specific item?
A. Unqualified opinion.
B. Qualified opinion.
C. Adverse opinion.
D. Disclaimer of opinion.
Answer: B ( Qualified opinion. )
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10. Independence is required in which of the following types of engagements?
A. Compilation engagements.
B. Review engagements.
C. Tax preparation engagements.
D. Consulting engagements.
Answer: B ( Review engagements. )
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11. What is the primary responsibility of management in the context of an audit?
A. To express an opinion on the financial statements.
B. To prepare and present the financial statements.
C. To ensure the audit is completed.
D. To detect fraud.
Answer: B ( To prepare and present the financial statements. )
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12. The term “materiality” in auditing refers to:
A. The amount of assets in financial statements.
B. The significance of a misstatement in influencing economic decisions.
C. The accuracy of financial statements.
D. The total revenue of the company.
Answer: B ( The significance of a misstatement in influencing economic decisions. )
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13. Which standard guides auditors on how to assess audit risks?
A. Statements on Auditing Standards (SAS).
B. Generally Accepted Accounting Principles (GAAP).
C. PCAOB Standards.
D. Code of Professional Conduct.
Answer: A ( Statements on Auditing Standards (SAS). )
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14. Audit sampling is used because:
A. It reduces audit cost and effort.
B. It ensures absolute accuracy in an audit.
C. It provides reasonable assurance.
D. Both A and C.
Answer: D ( Both A and C. )
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15. Which of the following is NOT a type of audit opinion?
A. Unqualified opinion.
B. Qualified opinion.
C. Disclaimer of opinion.
D. Analytical opinion.
Answer: D ( Analytical opinion. )
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16. Which of the following factors most directly impacts the auditor’s choice of procedures?
A. The entity’s market capitalization.
B. Audit risk and materiality.
C. Management preferences.
D. The type of entity being audited.
Answer: B ( Audit risk and materiality. )
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17. In which situation would an auditor issue a disclaimer of opinion?
A. Financial statements are misstated.
B. There is a lack of sufficient audit evidence.
C. Management refuses to provide written representations.
D. Both B and C.
Answer: D ( Both B and C. )
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18. Which of the following is an example of an attestation service?
A. Auditing historical financial statements.
B. Providing tax services.
C. Issuing a report on agreed-upon procedures.
D. Consulting on financial planning.
Answer: C ( Issuing a report on agreed-upon procedures. )
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19. The PCAOB is primarily responsible for:
A. Setting standards for private company audits.
B. Overseeing public company audits.
C. Enforcing accounting principles.
D. Providing tax guidance.
Answer: B ( Overseeing public company audits. )
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20. Which of the following components of an audit involves assessing internal controls?
A. Planning stage.
B. Risk assessment.
C. Substantive testing.
D. Reporting.
Answer: B ( Risk assessment. )
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21. An agreed-upon procedures engagement is characterized by:
A. Providing limited assurance.
B. Providing absolute assurance.
C. Reporting findings based on specified user requirements.
D. Auditing financial statements.
Answer: C ( Reporting findings based on specified user requirements. )
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22. Analytical procedures are used during:
A. Planning.
B. Substantive testing.
C. Final review.
D. All of the above.
Answer: D ( All of the above. )
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23. An unqualified audit opinion indicates:
A. A clean opinion with no reservations.
B. Significant misstatements exist.
C. No assurance is provided.
D. Limited assurance is provided.
Answer: A ( A clean opinion with no reservations. )
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24. Audit documentation is primarily used to:
A. Provide support for the audit report.
B. Serve as evidence of audit procedures.
C. Facilitate supervision of the audit process.
D. All of the above.
Answer: D ( All of the above. )
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25. What is the auditor’s responsibility in detecting fraud?
A. To ensure no fraud exists.
B. To design procedures to detect material fraud.
C. To monitor all employee actions.
D. To certify the financial statements.
Answer: B ( To design procedures to detect material fraud. )
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26. What is the main objective of attestation standards?
A. To establish procedures for reviews and compilations.
B. To improve comparability across attestation engagements.
C. To provide rules for tax engagements.
D. To define reporting formats.
Answer: B ( To improve comparability across attestation engagements. )
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27. The engagement letter is prepared to:
A. Set audit objectives.
B. Outline the responsibilities of both parties.
C. Plan the audit process.
D. Certify financial statements.
Answer: B ( Outline the responsibilities of both parties. )
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28. Which of the following engagements does NOT require independence?
A. Financial statement audit.
B. Review engagement.
C. Agreed-upon procedures engagement.
D. Compilation engagement.
Answer: D ( Compilation engagement. )
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29. What is the purpose of internal control testing during an audit?
A. To verify the completeness of financial statements.
B. To identify areas of fraud risk.
C. To assess the reliability of controls over financial reporting.
D. To prepare financial statements.
Answer: C ( To assess the reliability of controls over financial reporting. )
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30. What does an auditor evaluate in a compliance audit?
A. Adherence to GAAP.
B. Adherence to specific laws or regulations.
C. The efficiency of internal controls.
D. Management’s ethical conduct.
Answer: B ( Adherence to specific laws or regulations. )
31. Which of the following situations requires an emphasis-of-matter paragraph in the audit report?
A. The entity is a going concern.
B. There is a significant uncertainty regarding litigation.
C. A major accounting change has occurred.
D. All of the above.
Answer: D ( All of the above. )
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32. Which standard provides guidance for performing audits of entities receiving federal funds in the United States?
A. GAAS.
B. Government Auditing Standards (Yellow Book).
C. PCAOB Standards.
D. AICPA Code of Professional Conduct.
Answer: B ( Government Auditing Standards (Yellow Book). )
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33. In an audit, the term “reasonable assurance” means that:
A. The auditor guarantees the financial statements are accurate.
B. Misstatements below a certain threshold are acceptable.
C. The audit opinion is free of personal bias.
D. Audit risk has been completely eliminated.
Answer: B ( Misstatements below a certain threshold are acceptable. )
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34. An adverse opinion is issued when:
A. The auditor lacks sufficient audit evidence.
B. The financial statements contain pervasive material misstatements.
C. The auditor cannot confirm the independence of the company’s management.
D. The audit is completed but with significant restrictions.
Answer: B ( The financial statements contain pervasive material misstatements. )
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35. Which of the following is required in all audit engagements?
A. Testing 100% of all transactions.
B. Issuing an unqualified opinion.
C. Obtaining written management representations.
D. Detecting immaterial fraud.
Answer: C ( Obtaining written management representations )