Reliable AICPA CPA-Auditing Exam Dumps

Question No: 1

MultipleChoice

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 issues financial statements that present financial position and results of operations but omits the related statement of cash flows. Management discloses in the notes to the financial statements that it does not believe the statement of cash flows to be a useful financial statement.

List B

Report Modifications

Options

ADescribe the circumstances in an explanatory paragraph preceding the opinion paragraph without modifying the three standard paragraphs.

BDescribe the circumstances in an explanatory paragraph following the opinion paragraph without modifying the three standard paragraphs.

CDescribe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the opinion paragraph.

DDescribe the circumstances in an explanatory paragraph following the opinion paragraph and modify the opinion paragraph.

EDescribe the circumstances in an explanatory paragraph preceding the opinion paragraph and modify the scope and opinion paragraphs.

FDescribe the circumstances in an explanatory paragraph following the opinion paragraph and modify the scope and opinion paragraphs.

GDescribe the circumstances within the scope paragraph without adding an explanatory paragraph.

HDescribe the circumstances within the opinion paragraph without adding an explanatory paragraph.
i. Describe the circumstances within the scope and opinion paragraphs without adding an explanatory paragraph.

JIssue the standard auditor's report without modification.

Question No: 2

MultipleChoice

Which of the following accounting bases may be used to prepare financial statements in conformity with a comprehensive basis of accounting other than generally accepted accounting principles?

i. Basis of accounting used by an entity to file its income tax return.

ii. Cash receipts and disbursements basis of accounting.

Options

AI only.

BII only.

CBoth I and II.

DNeither I nor II.

Question No: 3

MultipleChoice

The senior auditor responsible for coordinating the fieldwork usually schedules a pre-audit conference with the audit team primarily to:

Options

AGive guidance to the staff regarding both technical and personnel aspects of the audit.

BDiscuss staff suggestions concerning the establishment and maintenance of time budgets.

CEstablish the need for using the work of specialists and internal auditors.

DProvide an opportunity to document staff disagreements regarding technical issues.
Explanation
Choice 'a' is correct. Pre-audit planning meetings are typically held to plan technical and personnel aspects of the audit. Assistants should be informed of their responsibilities and the objectives of the procedures that they are to perform.
Choice 'b' is incorrect. While staff suggestions regarding time budgets may be discussed, this is not typically the primary reason for the meeting.
Choice 'c' is incorrect. Establishing the need for specialists and internal auditors may be discussed, but this is not the primary reason for the meeting.
Choice 'd' is incorrect. Disagreements about technical issues arise and are resolved after testing begins, not during the pre-audit conference.

Question No: 4

MultipleChoice

Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?

Options

AAn independent trust company that has no direct contact with the employees who have recordkeeping responsibilities has possession of the securities.

BThe internal auditor verifies the marketable securities in the entity's safe each year on the balance sheet date.

CThe independent auditor traces all purchases and sales of marketable securities through the subsidiary ledgers to the general ledger.

DA designated member of the board of directors controls the securities in a bank safe-deposit box.

Question No: 5

MultipleChoice

An annual shareholders' report includes audited financial statements and contains supplementary information required by GAAP. Is it permissible for the auditor to report on such information?

Options

ANo, because such reporting may lead to the belief that the auditor is responsible for the information.

BNo, because the auditor has no responsibility to read the other information in a document containing audited financial statements.

CYes, provided the report provides negative assurance only.

DYes, provided the auditor performs sufficient audit procedures to determine whether the information is fairly stated, in all material respects, in relation to the financial statements.

Question No: 6

MultipleChoice

Which of the following is true about the term "likely misstatement?"

Options

AIt refers to misstatements that have not been specifically identified, but which are likely to exist based on the auditor's judgment.

BIt refers to the cumulative effect of misstatements from prior years on the current year's financial statements.

CIt refers to misstatements that have been specifically identified by the auditor.

DIt includes both identified misstatements and an estimate of unidentified misstatements.
Explanation
Choice 'a' is correct. A 'likely misstatement' is one that has not been specifically identified, but which is likely to exist based on the auditor's judgment.
Choice 'b' is incorrect. 'Likely misstatement' does not refer to the cumulative effect of prior year errors.
It is a measure of misstatements the auditor considers likely to exist, that have not been specifically identified.
Choice 'c' is incorrect. 'Likely misstatement' is a measure of misstatements the auditor considers likely to exist, that have not been specifically identified.
Choice 'd' is incorrect. The term 'likely misstatement' includes only an estimate of potential errors. It does not include specific misstatements identified during the audit.

Free AICPA CPA-Auditing Exam Dumps June 2026