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AICPA CPA-Auditing Exam Sample Questions

Question: 5

Which of the following accurately depicts the auditor’s responsibility with respect to Statements on Auditing Standards?

  1. The auditor is required to follow the guidance provided by the Standards, without exception.
  2. The auditor is generally required to follow the guidance provided by Standards with which he or she is familiar, but will not be held responsible for departing from provisions of which he or she was unaware.
  3. The auditor is generally required to follow the guidance provided by the Standards, unless following such guidance would result in an audit that is not cost-effective.
  4. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.


Answer: D

Explanation:

Choice “d” is correct. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.

Choice “a” is incorrect. On rare occasions, the auditor may depart from the guidance provided by the SASs, but he or she must justify such departures.

Choice “b” is incorrect. Lack of familiarity with a SAS is not a valid reason for departing from its guidance.

The auditor is expected to have sufficient knowledge of the SASs to identify those that are applicable to a given audit engagement.

Choice “c” is incorrect. The cost associated with following the guidance provided by a SAS is not an acceptable reason for departing from its guidance.

Question: 1

Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle. Which of the following should the auditor consider the most authoritative?

  1. FASB Technical Bulletins.
  2. AICPA Accounting Interpretations.
  3. FASB Statements of Financial Accounting Concepts.
  4. AICPA Technical Practice Aids.


Answer: A

Explanation: :

Choice “a” is correct. In accordance with the GAAP hierarchy, FASB Technical Bulletins are considered the most authoritative of the sources listed in the question.

Choice “b” is incorrect. Of the sources listed, AICPA Accounting Interpretations would be considered the second most authoritative.

Choice “c” is incorrect. FASB Statements of Financial Accounting Concepts are among the least authoritative sources of GAAP available to auditors.

Choice “d” is incorrect. AICPA Technical Practice Aids are among the least authoritative sources of GAAP available to auditors.

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Question: 5

Which of the following accurately depicts the auditor’s responsibility with respect to Statements on Auditing Standards?

  1. The auditor is required to follow the guidance provided by the Standards, without exception.
  2. The auditor is generally required to follow the guidance provided by Standards with which he or she is familiar, but will not be held responsible for departing from provisions of which he or she was unaware.
  3. The auditor is generally required to follow the guidance provided by the Standards, unless following such guidance would result in an audit that is not cost-effective.
  4. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.


Answer: D

Explanation:

Choice “d” is correct. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.

Choice “a” is incorrect. On rare occasions, the auditor may depart from the guidance provided by the SASs, but he or she must justify such departures.

Choice “b” is incorrect. Lack of familiarity with a SAS is not a valid reason for departing from its guidance.

The auditor is expected to have sufficient knowledge of the SASs to identify those that are applicable to a given audit engagement.

Choice “c” is incorrect. The cost associated with following the guidance provided by a SAS is not an acceptable reason for departing from its guidance.

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Question: 2

For an entity’s financial statements to be presented fairly in conformity with generally accepted accounting principles, the principles selected should:

  1. Be applied on a basis consistent with those followed in the prior year.
  2. Be approved by the Auditing Standards Board or the appropriate industry subcommittee.
  3. Reflect transactions in a manner that presents the financial statements within a range of acceptable limits.
  4. Match the principles used by most other entities within the entity’s particular industry.


Answer: C

Explanation:

Choice “c” is correct. Financial statements are presented fairly in conformity with GAAP when there are no material misstatements included therein. The fact that there may occasionally be immaterial misstatements means that the financial statements are correct “within a range of acceptable limits.”

Choice “a” is incorrect. Accounting principles may change from year to year. As long as such changes are properly accounted for, the financial statements are still in conformity with GAAP.

Choice “b” is incorrect. The AICPA and the FASB determine GAAP, not the Auditing Standards Board.

Choice “d” is incorrect. There is no requirement that an entity’s financial statements be prepared in accordance with prevalent industry practices in order to be in conformity with GAAP.

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Question: 5

Which of the following accurately depicts the auditor’s responsibility with respect to Statements on Auditing Standards?

  1. The auditor is required to follow the guidance provided by the Standards, without exception.
  2. The auditor is generally required to follow the guidance provided by Standards with which he or she is familiar, but will not be held responsible for departing from provisions of which he or she was unaware.
  3. The auditor is generally required to follow the guidance provided by the Standards, unless following such guidance would result in an audit that is not cost-effective.
  4. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.


Answer: D

Explanation:

Choice “d” is correct. The auditor is generally required to follow the guidance provided by the Standards, and should be able to justify any departures.

Choice “a” is incorrect. On rare occasions, the auditor may depart from the guidance provided by the SASs, but he or she must justify such departures.

Choice “b” is incorrect. Lack of familiarity with a SAS is not a valid reason for departing from its guidance.

The auditor is expected to have sufficient knowledge of the SASs to identify those that are applicable to a given audit engagement.

Choice “c” is incorrect. The cost associated with following the guidance provided by a SAS is not an acceptable reason for departing from its guidance.

Question: 1

Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle. Which of the following should the auditor consider the most authoritative?

  1. FASB Technical Bulletins.
  2. AICPA Accounting Interpretations.
  3. FASB Statements of Financial Accounting Concepts.
  4. AICPA Technical Practice Aids.


Answer: A

Explanation: :

Choice “a” is correct. In accordance with the GAAP hierarchy, FASB Technical Bulletins are considered the most authoritative of the sources listed in the question.

Choice “b” is incorrect. Of the sources listed, AICPA Accounting Interpretations would be considered the second most authoritative.

Choice “c” is incorrect. FASB Statements of Financial Accounting Concepts are among the least authoritative sources of GAAP available to auditors.

Choice “d” is incorrect. AICPA Technical Practice Aids are among the least authoritative sources of GAAP available to auditors.

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