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AICPA CPA-Auditing Exam
CPA Auditing and Attestation (AUD) (Page 25 )

Updated On: 12-Feb-2026
Page 25 of 207
PDF with 1026 Questions

When audited financial statements are presented in a client's document containing other information, the auditor should:

  1. Perform inquiry and analytical procedures to ascertain whether the other information is reasonable.
  2. Add an explanatory paragraph to the auditor's report without changing the opinion on the financial statements.
  3. Perform the appropriate substantive auditing procedures to corroborate the other information.
  4. Read the other information to determine that it is consistent with the audited financial statements.

Answer(s): D

Explanation:

Choice "d" is correct. The auditor should read the "other information" in a client's document containing audited FS to determine that it is consistent with the audited FS. Choice "a" is incorrect. Performing analytical procedures or any other procedure is not necessary. Choice "b" is incorrect. An explanatory paragraph is not required. Choice "c" is incorrect. The auditor has no obligation to perform any procedure to corroborate "other information" contained in a document such as an annual report.



An auditor may report on condensed financial statements that are derived from complete audited financial statements if the:

  1. Auditor indicates whether the information in the condensed financial statements is fairly stated in all material respects.
  2. Condensed financial statements are presented in comparative form with the prior year's condensed financial statements.
  3. Auditor describes the additional review procedures performed on the condensed financial statements.
  4. Condensed financial statements are distributed only to management and the board of directors.

Answer(s): A

Explanation:

Choice "a" is correct.
When reporting on condensed financial statements that are derived from complete audited financial statements, the auditor should indicate in his report whether the information in the condensed financial statements is fairly stated in all material respects (in relation to the basic financial statements taken as a whole).
Choices "b" and "d" are incorrect. There is no requirement that the condensed financial statements be presented in comparative form, or that they be distributed only to management and the board of directors (i.e., distribution is not restricted).
Choice "c" is incorrect. The auditor would not perform or describe additional review procedures related to the condensed financial statements.



If management (of a governmental body) declines to present supplementary information required by the Governmental Accounting Standards Board (GASB), the auditor should issue a(an):

  1. Adverse opinion.
  2. Qualified opinion with an explanatory paragraph.
  3. Unqualified opinion.
  4. Unqualified opinion with an additional explanatory paragraph.

Answer(s): D

Explanation:

Choice "d" is correct. If management (of a governmental body) declines to present information required by the GASB, the auditor should issue an unqualified opinion with an additional explanatory paragraph.
Choices "a", "b", and "c" are incorrect, per the above Explanation.



The objective of auditing procedures applied to segment information is to provide the auditor with a reasonable basis for concluding whether:

  1. The information is useful for comparing a segment of one enterprise with a similar segment of another enterprise.
  2. Sufficient audit evidence has been obtained to allow the auditor to be associated with the segment information.
  3. A separate opinion on the segment information is necessary due to inconsistent application of accounting principles.
  4. The information is presented in conformity with the FASB Statement on segment information.

Answer(s): D

Explanation:

Choice "d" is correct. The auditor's objective is to provide a reasonable basis for concluding whether segment information is presented in conformity with GAAP. Choice "a" is incorrect. The auditor is not required to see that segment information included is comparable to other enterprises.
Choice "b" is incorrect. Sufficient audit evidence must be obtained to ensure that segment information is presented in accordance with GAAP, not to allow the auditor to be associated with such information.
Choice "c" is incorrect. The inclusion of segment information is a GAAP requirement, and a separate opinion is not required.



Green, CPA, is requested to render an opinion on the application of accounting principles by an entity that is audited by another CP

  1. Green may:
  2. Not accept such an engagement because to do so would be considered unethical.
  3. Not accept such an engagement because Green would lack the necessary information on which to base an opinion without conducting an audit.
  4. Accept the engagement but should form an independent opinion without consulting with the continuing CPA.
  5. Accept the engagement but should consult with the continuing CPA to ascertain all the available facts relevant to forming a professional judgment.

Answer(s): D

Explanation:

Choice "d" is correct. A "reporting accountant" (an accountant in public practice who is requested to render an opinion on the application of GAAP by an entity audited by another CPA) may accept the engagement, but should consult with the "continuing CPA" to ascertain the available facts relevant to forming a professional judgment.
Choices "a" and "b" are incorrect. A reporting CPA may accept an engagement to render an opinion on GAAP of an entity audited by another CPA. The reporting CPA should consult with the continuing CPA to obtain pertinent information.
Choice "c" is incorrect. The reporting accountant should consult with the continuing accountant to ascertain all the available, relevant facts.






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