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AICPA CPA-Auditing Exam
CPA Auditing and Attestation (AUD) (Page 3 )

Updated On: 9-Feb-2026
Page 3 of 207
PDF with 1026 Questions

In the first audit of a new client, an auditor was able to extend auditing procedures to gather sufficient evidence about consistency. Under these circumstances, the auditor should:

  1. Not report on the client's income statement.
  2. Not refer to consistency in the auditor's report.
  3. State that the consistency standard does not apply.
  4. State that the accounting principles have been applied consistently.

Answer(s): B

Explanation:

Choice "b" is correct. The auditor's standard report implies that the auditor is satisfied that the comparability of financial statements between periods has not been materially affected by changes in accounting principles and that such principles have been consistently applied between or among periods.
Since the auditor has gathered sufficient evidence about consistency, no reference need be made in the report.

Choice "a" is incorrect. If the auditor is able to obtain sufficient evidence about consistency, the auditor may report on the entity's financial statements. Choice "c" is incorrect. The consistency standard is one of the ten GAAS, and it does apply to this audit.
Choice "d" is incorrect. If the auditor is able to obtain sufficient evidence about consistency, no mention of consistency need be made. Consistency is implied in the standard report.



The third general standard states that due care is to be exercised in the performance of an audit. This standard is ordinarily interpreted to require:

  1. Thorough review of the existing safeguards over access to assets and records.
  2. Limited review of the indications of employee fraud and illegal acts.
  3. Objective review of the adequacy of the technical training and proficiency of firm personnel.
  4. Critical review of the judgment exercised at every level of supervision.

Answer(s): D

Explanation:

Choice "d" is correct. The third general standard of due care is ordinarily interpreted to require critical review of the judgment exercised at every level of supervision, and the judgment exercised by those assisting in the audit.
Choice "a" is incorrect. The third general standard of due care does not require a thorough review of the existing safeguards over access to assets and records. Choice "b" is incorrect. The standard of due care does not specifically require a limited review of the indications of employee fraud and illegal acts.
Choice "c" is incorrect. The standard of due care does not require a review of audit staff training and proficiency.



The concept of materiality would be least important to an auditor when considering the:

  1. Adequacy of disclosure of a client's illegal act.
  2. Discovery of weaknesses in a client's internal control.
  3. Effects of a direct financial interest in the client on the CPA's independence.
  4. Decision whether to use positive or negative confirmations of accounts receivable.

Answer(s): C

Explanation:

Choice "c" is correct. Any direct financial interest in a client impairs independence, even if it is immaterial.
Choice "a" is incorrect. A material illegal act may require disclosure in or adjustment to the financial statements, whereas an immaterial illegal act may not require disclosure. Choice "b" is incorrect. A material weakness in internal control will affect the nature, timing, and extent of audit procedures, whereas an immaterial weakness in internal control may have little impact on the audit.
Choice "d" is incorrect. An auditor is likely to use positive confirmations for material accounts receivable, but may consider negative confirmations for immaterial receivable balances.



An auditor of a nonpublic company must conduct the audit in accordance with:

I). ASB standards.
II). PCAOB standards.

  1. I.
  2. Both I and II.
  3. Either I or II, but not both.
  4. II.

Answer(s): A

Explanation:

Choice "a" is correct. An auditor of a nonpublic company must conduct the audit in accordance with ASB standards.
Choice "b" is incorrect. An auditor of a nonpublic company is not required to conduct the audit in accordance with PCAOB standards.
Choice "c" is incorrect.
While an auditor is only required to conduct the audit in accordance with ASB standards, the auditor may choose to follow PCAOB standards as well. Choice "d" is incorrect. An auditor of a nonpublic company is not required to conduct the audit in accordance with PCAOB standards.



Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of:

  1. Objective judgment.
  2. Independent integrity.
  3. Professional skepticism.
  4. Impartial conservatism.

Answer(s): C

Explanation:

Choice "c" is correct. The auditor should plan and perform the audit with an attitude of professional skepticism. This attitude includes a questioning mind and a critical assessment of audit evidence. Choices "a", "b", and "d" are incorrect. Objectivity, independence, integrity, and impartiality are basic ethical characteristics and professional qualities embodied in the general standards.






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