AICPA CPA-Auditing Exam Dumps

Choice 'c' is correct. The auditor should discuss with those charged with governance any significant disagreements with management, whether or not satisfactorily resolved, about matters that are significant to the financial statements or to the auditor's report.

Choices 'a' and 'b' are incorrect. There is no requirement that the auditor's communication with those charged with governance include a justification for any of the judgments made in conducting the audit.

Choice 'd' is incorrect. An auditor of an SEC client is required to discuss his or her judgment about the quality of the entity's accounting principles and estimates, not the quality of the entity's earnings. Note too that this requirement does not apply to non-SEC clients, and that no comparison to prior year is required.

Choice 'b' is correct. The auditor should consider the nature of the information requested when determining the sampling unit for the current year audit. Certain respondents' accounting systems may facilitate the confirmation of single transactions rather than of entire balances.

Choice 'a' is incorrect. The auditor would not limit the population to overdue balances, since current balances can also be misstated.

Choices 'c' and 'd' are incorrect. Defining the sampling unit based on account size would not address the problem that caused differences during the prior year.

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.

Choice 'd' is correct. If a liability is significant enough, it may give rise to a situation in which there is substantial doubt about an entity's ability to continue as a going concern. Inquiring of an entity's legal counsel about litigation, claims, and assessments is one way to determine whether such a liability exists.

Choice 'a' is incorrect. Cutoff tests are used to determine whether sales are recorded in the proper period. Applying such tests to customer accounts with long-standing receivable balances would not provide information about the entity's ability to continue a as a going concern.

Choice 'b' is incorrect. Evaluating the entity's procedures for identifying and recording related party transactions is a means for the auditor to evaluate financial statement presentation and disclosure, but it does not provide information about going concern issues.

Choice 'c' is incorrect. Identifying situations in which real property is pledged as collateral is a means for the auditor to evaluate financial statement presentation and disclosure, but it does not provide information about going concern issues.