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| Vendor: | AICPA |
|---|---|
| Exam Code: | CPA-Auditing |
| Exam Name: | CPA Auditing and Attestation |
| Exam Questions: | 1025 |
| Last Updated: | June 24, 2026 |
| Related Certifications: | Uniform CPA Examination |
| Exam Tags: | AICPA Auditing management Financial Manager |
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Which of the following statements is correct concerning an auditor's responsibility to report fraud?
In testing the existence assertion for an asset, an auditor ordinarily works from the:
Choice 'c' is correct. In testing the existence assertion for an asset, an auditor ordinarily works from the accounting records to the supporting evidence.
Choice 'a' is incorrect. If the auditor works from the financial statements, all items selected will have been recorded (i.e., because they are included in the financial statements). Therefore, starting with the financial statements will not lead to any unrecorded items.
Choice 'b' is incorrect. Tracing potentially unrecorded items to the financial statements tests for completeness, not existence.
Choice 'd' is incorrect. Tracing from supporting evidence to the accounting records tests for completeness, not existence.
Green, CPA, is requested to render an opinion on the application of accounting principles by an entity that is audited by another CP
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.
Which of the following is true about an auditor's responsibility with respect to accounting estimates?
Choice 'c' is correct. The auditor is responsible for evaluating the reasonableness of accounting estimates.
Choices 'a' and 'b' are incorrect. Management is responsible for establishing a process for preparing accounting estimates.
Choice 'd' is incorrect. The auditor must determine whether the accounting estimate is reasonable in the circumstances.
In evaluating the reasonableness of an entity's accounting estimates, an auditor normally would be concerned about assumptions that are:
Choice 'a' is correct. An auditor would be concerned about assumptions that are susceptible to bias because it is more likely that estimates based on such assumptions will be misstated.
Choice 'b' is incorrect. The auditor would not normally be concerned about assumptions that are consistent with prior periods, as estimates based on such assumptions are less likely to be misstated.
Choice 'c' is incorrect. The auditor would not normally be concerned about assumptions that are insensitive to variation, as estimates based on such assumptions are less likely to be misstated.
Choice 'd' is incorrect. The auditor would not normally be concerned about assumptions that are similar to industry guidelines, as estimates based on such assumptions are less likely to be misstated.
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