AICPA Released Questions from the 2020 Uniform CPA Exam - Released ...

AICPA Released Questions from the 2020 Uniform CPA Exam - Released April 2020 -

_______________________________________ AUDITING & ATTESTATION

Uniform CPA Examination Questions and unofficial Answers, copyright by American Institute of Certified Public Accountants, Inc. All rights reserved. Reprinted by UWorld Roger CPA Review with permission.

UWorld Roger CPA Review

2020 AICPA Released Questions ? AUD

2020 AICPA Released Questions for AUD

The Key gives the correct letter answer for each question. Key: A

The numbering system indicates the AICPA Blueprint Representative Task and Skill Level for each question. AUD.CSO.20190701: AUD.001.001.001 AUD.SSO.20190701: Remembering and Understanding:1

MULTIPLE CHOICE - MODERATE

In which of the following situations would an auditor who is rendering an audit opinion on the financial statements of an employee benefit plan that will be filed with the Department of Labor be considered independent?

A. The auditor's spouse has obtained an immaterial direct financial interest in the employee benefit plan.

B. The auditor obtained a material indirect financial interest in the employee benefit plan.

C. A member of the auditor's firm was an investment advisor to the employee benefit plan during the period of professional engagement but was not providing services as of the date of the opinion.

D. A member of the auditor's firm was a voting trustee of the plan in a prior year but has since disassociated from the plan and did not participate in auditing the financial statements of the plan.

An accountant performing audits of employee benefit plans is required to comply with the independence requirements of the Department of Labor (DOL). The DOL independence requirements are a bit more restrictive than the AICPA requirements.

Three types of relationships can impair an accountant's independence. The requirements apply to the accountant and the accountant's firm and relate to the period of the engagement as well as the period covered by the engagement.

Independence is impaired by:

? Having, or committing to acquiring, any direct financial interest or any material indirect financial interest in the plan.

? Acting as the plan's, or plan sponsor's, promoter, underwriter, investment advisor, voting trustee, director, officer, or employee.

? Maintaining financial records for the plan.

Since the member of the auditor's firm was a voting trustee in a prior year and did not participate in auditing the plan financial statements in the current year, there is not a breach of independence.

2

UWorld Roger CPA Review

Item ID:

24853

Key: D

AUD.CSO.20190701: AUD.001.002.003

AUD.SSO.20190701: Application:2

2020 AICPA Released Questions ? AUD

3

UWorld Roger CPA Review

2020 AICPA Released Questions ? AUD

The primary objective of an auditor when considering the acceptance of an initial audit engagement of a nonissuer is to

A. Establish whether the preconditions for an audit are present.

B. Agree with management on the timing of tests at interim and year end.

C. Limit the auditor's responsibility if management fails to provide written representations.

D. Specify the degree to which management intends to rely on the auditor's testing of internal controls.

Deciding whether to accept an audit engagement will depend on whether the preconditions for an audit have been met. There are two key considerations in making this decision:

? Determining the acceptability of the financial reporting framework (FRF) being applied. ? Obtaining management's agreement that it understands and accepts certain

responsibilities: o Preparation and fair presentation of the financial statements (F/S) in accordance with the FRF (including all appropriate informative disclosures related to a special purpose framework when used to prepare the F/S); o Design, implementation, and maintenance (DIM) of internal control relevant to reliable financial reporting that is free from material misstatement, whether due to fraud or error; and o Providing the auditor with access to all relevant information of which management is aware; additional information requested by the auditor; and unrestricted access to entity personnel (no client-imposed scope limit).

The auditor will also want to make certain that the F/S are auditable. If the accounting records are inadequate, the auditor may not have the ability to gather sufficient appropriate audit evidence and will have to refuse the engagement.

Agreeing on the timing of tests and limiting the auditor's responsibility if management fails to provide written representations would be addressed in the engagement letter, after the auditor has accepted the engagement. Management does not rely on the auditor's testing of internal control.

Item ID:

74327

Key: A

AUD.CSO.20190701: AUD.001.003.001

AUD.SSO.20190701: Remembering and Understanding:1

4

UWorld Roger CPA Review

2020 AICPA Released Questions ? AUD

An auditor encounters significant difficulties during an audit that are likely to lead to a modified opinion. When would it be most appropriate for the auditor to communicate those difficulties to the audit committee?

A. On the report issuance date.

B. Early in the audit engagement acceptance process.

C. As soon as is practicable during the course of the engagement.

D. On the last day of fieldwork.

Certain matters should be communicated to those charged with governance. For entities with formal structures, this will generally be the audit committee. Among the matters the auditor should communicate are (use the mnemonic DISAPPROVE):

? Disagreements with management about accounting policies or audit procedures. ? Illegal acts and significant errors discovered during the audit, fraud involving senior

management, noncompliance with laws and regulations. ? Significant accounting policies adopted or changed by management. ? Adjustments proposed by the auditor with a significant impact on the F/S. ? Prior discussions with management before acceptance of the engagement. ? Problems or significant difficulties arising during the audit, if any, in obtaining evidence

and employee cooperation. ? Responsibilities of the auditor under GAAS to form and express an opinion on whether

the F/S are prepared, in all material respects, in accordance with the AFRF. ? Other information discussed or dealt with by management when those charged with

governance are not all involved in management. ? Views of the accountant regarding the qualitative aspects of the entity's significant

accounting policies, estimates, and disclosures. ? Estimates in the accounting records and the process used to obtain them, including fair

value estimates, and the basis for the auditor's conclusion about their reasonableness.

Should an auditor encounter significant difficulties during an audit, they should inform the audit committee as soon as possible. The audit committee may be able to resolve those difficulties in a timely manner, avoiding the possibility of a modified opinion.

Item ID:

20443

Key: C

AUD.CSO.20190701: AUD.001.005.003

AUD.SSO.20190701: Remembering and Understanding:1

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download