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AICPA CPA-Auditing Exam - Topic 3 Question 66 Discussion

Samples to test internal control are intended to provide a basis for an auditor to conclude whether:
A) The control activities are operating effectively.
B) The financial statements are materially misstated.
C) The risk of incorrect acceptance is too high.
D) Materiality for planning purposes is at a sufficiently low level. Explanation Choice 'a' is correct. Samples to test internal control are intended to provide a basis for an auditor to conclude whether the control activities are operating effectively. Choice 'b' is incorrect. Tests of controls may provide evidence regarding the likelihood of misstatement, but they do not provide a basis for concluding whether the financial statements are materially misstated. Choice 'c' is incorrect. The risk of incorrect acceptance is an aspect of sampling risk related to substantive tests, not tests of controls. Choice 'd' is incorrect. Samples to test controls do not provide evidence regarding materiality levels for planning purposes.

AICPA CPA-Auditing Exam - Topic 3 Question 66 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 66
Topic #: 3
[All CPA-Auditing Questions]

Samples to test internal control are intended to provide a basis for an auditor to conclude whether:

Show Suggested Answer Hide Answer
Suggested Answer: A

Choice 'a' is correct. The auditor's report on compliance and on internal control over financial recording (based on an audit) must include the scope of testing of compliance and internal control.

Choice 'b' is incorrect. Material indications of illegal acts are not only reported to the members of the governing body of the audited entity and their senior staff officials but, in some circumstances, auditors should report illegal acts directly to external parties (such as the grantor agency).

Choice 'c' is incorrect. Although GAO standards require that the auditor communicate information regarding the nature, timing and extent of planned testing to officials of the audited entity and to individuals contracting for the audit, reporting of all changes is not required. (For example, immaterial changes to the audit program need not be reported.)

Choice 'd' is incorrect. Certain privileged or confidential information may be prohibited from general disclosure and should not be included in the audit report. The report should, however, disclose the nature of the information omitted and the requirement that makes an opinion necessary.


by Chantell at Feb 27, 2023, 01:20 AM

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Alysa
7 months ago
Agreed, it’s all about the effectiveness of control activities!
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Heike
8 months ago
Sounds too simple. Are we sure about this?
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Nida
8 months ago
Wait, so tests of controls don’t show if the statements are misstated?
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Tien
8 months ago
I thought it was about material misstatements?
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Alpha
8 months ago
Choice A is definitely the right one!
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Eric
9 months ago
I vaguely recall something about sampling risks, but I’m not sure if that relates to this question. I think C and D are definitely not what we’re looking for here.
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Elke
9 months ago
I practiced a similar question where we had to identify the purpose of control testing, and I think it was to check the effectiveness of controls, which points to A again.
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Gwen
9 months ago
I’m a bit unsure, but I think we discussed how tests of controls don’t directly assess the financial statements. So, B seems wrong, right?
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Tennie
9 months ago
I remember studying that tests of controls are specifically about evaluating whether the controls are working as intended. So, I think A is the right choice.
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Lavonda
9 months ago
Hmm, this looks like a tricky one. I'll need to think through the different networking planes in VMware NSX-T to figure out the right answer.
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Tommy
9 months ago
Easy peasy! If the equipment isn't deteriorating much, there's no need to take it out of service for an internal inspection. External inspection is the way to go.
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Shawnda
9 months ago
Hmm, I'm not too familiar with Cisco Meeting Server and the specific configuration settings required. I'll need to think this through carefully.
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Yvonne
10 months ago
I'm a bit confused on this one. I'm not sure if fail2ban is modifying the SSHD configuration or using some kind of proxy setup. I'll have to review my notes on how fail2ban works.
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Fannie
1 year ago
I was stuck between A and C, but A seems to be the clear winner here. Control testing is the name of the game.
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Dalene
1 year ago
It's important to focus on the effectiveness of control activities to ensure the accuracy of financial statements.
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Camellia
1 year ago
Definitely, that's why choice A is the correct answer. It's all about making sure the controls are operating as intended.
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Tyisha
1 year ago
I agree, control testing is crucial for auditors to determine if the control activities are effective.
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Trinidad
1 year ago
It's important to focus on testing control activities to ensure everything is running smoothly.
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Lynelle
1 year ago
Definitely, it's all about making sure the internal controls are operating as intended.
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Blythe
1 year ago
I agree, control testing is crucial for auditors to determine if the activities are effective.
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Corazon
1 year ago
Haha, D is a strange choice. Materiality for planning? That's like asking the mailman to fix the roof.
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Leanna
1 year ago
Testing internal controls is crucial for the auditor to assess effectiveness.
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Carmela
1 year ago
Haha, comparing it to asking the mailman to fix the roof is spot on.
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Allene
1 year ago
Exactly, testing internal controls is about ensuring they are operating effectively.
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Claribel
1 year ago
I agree, D doesn't make sense. It's all about testing control activities.
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Roxane
1 year ago
Haha, D is definitely out of place here. It's all about the control activities.
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Mozell
1 year ago
A is the correct choice, focusing on whether control activities are effective.
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Matthew
1 year ago
Exactly, it's all about testing internal controls, not materiality for planning.
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Wilburn
1 year ago
I know, right? D doesn't make any sense in this context.
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Marcos
1 year ago
I'm not sure, but it makes sense that testing internal control is to see if the control activities are working properly.
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Nadine
1 year ago
I agree with Noel. Testing internal control is all about ensuring the control activities are effective.
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An
1 year ago
Hmm, I was leaning towards B, but I guess that's more for substantive testing. A makes sense for control testing.
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Kendra
1 year ago
User 2: Yeah, tests of controls are for that purpose.
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Osvaldo
1 year ago
User 1: A) The control activities are operating effectively.
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Barrett
1 year ago
I think option A is the correct answer. Internal control testing is all about evaluating the effectiveness of controls, not the financial statements themselves.
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Herminia
1 year ago
So, it's clear that the main focus of sampling for internal control is to assess the effectiveness of control activities.
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Jolene
1 year ago
I think we can rule out option B and D, as they are not directly related to testing internal controls.
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Florencia
1 year ago
Definitely, testing internal controls is crucial for ensuring effectiveness in operations.
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Carlee
1 year ago
I agree, option A is the right choice. It's all about checking if the control activities are working well.
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Noel
1 year ago
I think the answer is A) The control activities are operating effectively.
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