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AICPA CPA-Auditing Exam Actual Questions
CPA Auditing and Attestation (AUD) (Page 19 )

Updated On: 11-Aug-2026
Page 19 of 207
PDF with 1026 Questions

Which of the following statements is not true regarding the auditor's responsibility for subsequent events?

  1. The auditor has an active responsibility to make continuing inquiries between the date of the auditor's report and the date on which the report is submitted.
  2. The auditor has an active responsibility to make continuing inquiries between the date of the financial statements and the date of the auditor's report.
  3. The auditor has an active responsibility to make continuing inquiries between the date of the financial statements and the date on which sufficient appropriate audit evidence has been obtained.
  4. The auditor has no active responsibility to make continuing inquiries after the date of the auditor's report.

Answer(s): A

Explanation:

Choice "a" is correct. The auditor has no active responsibility to make continuing inquiries between the date of the auditor's report and the date on which the report is submitted. The auditor's active responsibility stops on the date of the auditor's report. Choice "b" is incorrect. The auditor does have an active responsibility to make continuing inquiries between the date of the financial statements and the date of the auditor's report. Choice "c" is incorrect. The auditor does have an active responsibility to make continuing inquiries between the date of the financial statements and the date on which sufficient appropriate audit evidence has been obtained.
Choice "d" is incorrect. The auditor has no active responsibility to make continuing inquiries after the date of the auditor's report.



Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?

  1. Confirming a sample of material accounts receivable established after year-end.
  2. Comparing the financial statements being reported on with those of the prior period.
  3. Investigating personnel changes in the accounting department occurring after year-end.
  4. Inquiring as to whether any unusual adjustments were made after year-end.

Answer(s): D

Explanation:

Choice "d" is correct. An auditor would most likely inquire as to whether any unusual adjustments were made after year-end that would require adjustment to and/or disclosure in the year-end financial statements.
Choice "a" is incorrect. Obtaining evidence about A/R that were established after year-end would not provide the auditor with information about subsequent events, since any information about these A/R would not require adjustment to or disclosure in the prior year financial statements. Choice "b" is incorrect. Comparing the financial statements being reported on with those of the prior period is not a very good source of subsequent event information. Choice "c" is incorrect. Changes in accounting personnel at any time would probably not result in any subsequent event financial statement adjustment or disclosure.



Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

  1. An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern.
  2. A contingency is resolved that had been disclosed in the audited financial statements.
  3. New information is discovered concerning undisclosed lease transactions of the audited period.
  4. A subsidiary is sold that accounts for 25% of the entity's consolidated net income.

Answer(s): C

Explanation:

Choice "c" is correct. The question addresses the subsequent discovery of facts that may have existed at the balance sheet date. Such events will often require an adjustment to the financial statements. An example is new information discovered about undisclosed lease transactions of the audited period. As a result, the auditor should make further inquiry to determine whether the information is reliable and whether the facts existed at the date of the report. Choice "a" is incorrect. The natural disaster is an example of a subsequent event occurring after the date of the auditor's report that the auditor has no obligation to investigate. Choice "b" is incorrect. The resolution of a disclosed contingency is an example of a subsequent event occurring after the date of the auditor's report that the auditor has no obligation to investigate.
Choice "d" is incorrect. Sale of a subsidiary occurring after the date of the auditor's report is an example of a subsequent event that the auditor has no obligation to investigate.



Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events?

  1. Determine that changes in employee pay rates after year-end were properly authorized.
  2. Recompute depreciation charges for plant assets sold after year-end.
  3. Inquire about payroll checks that were recorded before year-end but cashed after year-end.
  4. Investigate changes in long-term debt occurring after year-end.

Answer(s): D

Explanation:

Choice "d" is correct. In obtaining evidence about subsequent events, an auditor would investigate changes in long-term debt occurring after year-end to determine if there was an unrecorded liability as of the end of the year. In addition, subsequent sales of LT debt require footnote disclosure. Choice "a" is incorrect. Changes in employee pay rates occurring after year-end would have no effect on the year under audit.
Choice "b" is incorrect. Plant assets sold after the end of the year (that were not related to a current year transaction such as a discontinued operation) have no impact on the current year's financial statements.
Choice "c" is incorrect.
Following up on payroll checks that were cashed after year-end is generally not the most effective way to audit accrued payroll and would provide little evidence about subsequent events.



An auditor is considering whether the omission of a substantive procedure considered necessary at the time of an audit may impair the auditor's present ability to support the previously expressed opinion. The auditor need not apply the omitted procedure if the:

  1. Financial statements and auditor's report were not distributed beyond management and the board of directors.
  2. Auditor's previously expressed opinion was qualified because of a departure from GAAP.
  3. Results of other procedures that were applied tend to compensate for the procedure omitted.
  4. Omission is due to unreasonable delays by client personnel in providing data on a timely basis.

Answer(s): C

Explanation:

Choice "c" is correct.
When the auditor concludes that an auditing procedure considered necessary at the time of the audit was omitted, the auditor should assess the importance of the procedure to the present ability to support the previously issued opinion. The results of other procedures that were applied may tend to compensate for the one omitted or make its omission less important. Choice "a" is incorrect. If a procedure has been omitted, the auditor must consider whether other parties may be relying on the financial statements, even if the audit report had limited distribution. Choice "b" is incorrect. The fact that the previous opinion was qualified does not negate the need to apply the omitted procedure.
Choice "d" is incorrect. Delays by client personnel may extend audit work, but do not provide a reason for omitting a procedure.



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