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AICPA CPA-Auditing Exam
CPA Auditing and Attestation (AUD) (Page 37 )

Updated On: 12-Feb-2026
Page 37 of 207
PDF with 1026 Questions

This question presents independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue. Select as the best answer for this item, the action the auditor normally would take. The types of opinions in List A may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
An entity discloses in the notes to the financial statements certain lease obligations. The auditor believes that the failure to capitalize these leases is a departure from generally accepted accounting principles.
List A
Types of Options

  1. An "except for" qualified opinion.
  2. An unqualified opinion.
  3. An adverse opinion.
  4. A disclaimer of opinion.
  5. Either an "except for" qualified opinion or an adverse opinion.
  6. Either a disclaimer of opinion or an "except for" qualified opinion.
  7. Either an adverse opinion or a disclaimer of opinion.

Answer(s): E

Explanation:

Choice "E" is the correct opinion. This is a GAAP departure. Either an "except for" qualified opinion (if the item is material) or an adverse opinion (if the item is very material) should be issued.



This question presents independent factual situations an auditor might encounter in conducting an audit. List B represents the report modifications (if any) that would be necessary. Select as the best answer for each item, the action the auditor normally would take. The report modifications in List B may be selected once, more than once, or not at all.
Assume:
· The auditor is independent.
· The auditor previously expressed an unqualified opinion on the prior year's financial statements. · Only single-year (not comparative) statements are presented for the current year. · The conditions for an unqualified opinion exist unless contradicted in the factual situations. · The conditions stated in the factual situations are material. · No report modifications are to be made except in response to the factual situation.
Item to Be Answered
An entity discloses in the notes to the financial statements certain lease obligations. The auditor believes that the failure to capitalize these leases is a departure from generally accepted accounting principles.
List B
Report Modifications

  1. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph without modifying the three standard paragraphs.
  2. Describe the circumstances in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.
  3. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the opinion paragraph.
  4. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the opinion paragraph.
  5. Describe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the scope and opinion paragraphs.
  6. Describe the circumstances in an explanatory paragraph following the opinion paragraph and modify the scope and opinion paragraphs.
  7. Describe the circumstances within the scope paragraph without adding an explanatory paragraph.
  8. Describe the circumstances within the opinion paragraph without adding an explanatory paragraph.
  9. Describe the circumstances within the scope and opinion paragraphs without adding an explanatory paragraph.
  10. Issue the standard auditor's report without modification.

Answer(s): C

Explanation:

Choice "C" is the correct modification. The circumstances should be described in an explanatory paragraph preceding the opinion paragraph and the opinion paragraph should be modified.
Quality Control Standards



The nature and extent of a CPA firm's quality control policies and procedures depend on:

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): A

Explanation:

Choice "a" is correct. The nature and extent of a CPA firm's quality controls depend on a number of factors, such as its size, the degree of operating autonomy allowed its personnel and its practice offices, the nature of its practice, its organization, and appropriate cost-benefit considerations. Choices "b", "c", and "d" are incorrect, based on the above Explanation.



Would the following factors ordinarily be considered in planning an audit engagement's personnel requirements?

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): A

Explanation:

Choice "a" is correct.
When assigning personnel to an engagement, the firm should consider the following factors in achieving a balance of engagement manpower requirements, personnel skills, and individual development and utilization: 1) engagement size and complexity, 2) personnel availability, 3) special expertise required, 4) timing of the work to be performed, 5) continuity and periodic rotation of personnel, and 6) opportunities for on-the-job training. Choices "b", "c", and "d" are incorrect, based on the above Explanation.



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:

  1. The fair presentation of the financial statements in conformity with GAAP.
  2. Fraud involving the client's management and its employees.
  3. The materiality of the adjusting entries proposed by the audit staff.
  4. The communication of internal control weaknesses to those charged with governance.

Answer(s): A

Explanation:

Choice "a" is correct. The primary purpose of a second partner review is to ensure that the financial statements are presented in accordance with GAAP.
Choice "b" is incorrect. A search for fraud is typically not part of a second partner review. Choice "c" is incorrect. The materiality of adjusting entries proposed by the audit staff may be reviewed by a second partner, but they are not the primary focus of such a review. Choice "d" is incorrect. The communication of internal control weaknesses to those charged with governance is not a primary focus of a second partner review.






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