Discuss AICPA CPA-Auditing Exam Topic 3 Question 66

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

AThe control activities are operating effectively.

BThe financial statements are materially misstated.

CThe risk of incorrect acceptance is too high.

DMateriality 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.

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.

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40 comments · newest first

Alysa 10 months ago

Agreed, it’s all about the effectiveness of control activities!

Heike 11 months ago

Sounds too simple. Are we sure about this?

Nida 11 months ago

Wait, so tests of controls don’t show if the statements are misstated?

Tien 11 months ago

I thought it was about material misstatements?

Alpha 11 months ago

Choice A is definitely the right one!

Eric 12 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.

Elke 12 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.

Gwen 12 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?

Tennie 1 year 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.

Lavonda 1 year 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.

Tommy 1 year 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.

Shawnda 1 year 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.

Yvonne 1 year 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.

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.

Dalene 1 year ago

↳ replying to Fannie

It's important to focus on the effectiveness of control activities to ensure the accuracy of financial statements.

Camellia 1 year ago

↳ replying to Fannie

Definitely, that's why choice A is the correct answer. It's all about making sure the controls are operating as intended.

Tyisha 1 year ago

↳ replying to Fannie

I agree, control testing is crucial for auditors to determine if the control activities are effective.

Trinidad 1 year ago

↳ replying to Fannie

It's important to focus on testing control activities to ensure everything is running smoothly.

Lynelle 1 year ago

↳ replying to Fannie

Definitely, it's all about making sure the internal controls are operating as intended.

Blythe 1 year ago

↳ replying to Fannie

I agree, control testing is crucial for auditors to determine if the activities are effective.

Corazon 1 year ago

Haha, D is a strange choice. Materiality for planning? That's like asking the mailman to fix the roof.

Leanna 1 year ago

↳ replying to Corazon

Testing internal controls is crucial for the auditor to assess effectiveness.

Carmela 1 year ago

↳ replying to Corazon

Haha, comparing it to asking the mailman to fix the roof is spot on.

Allene 1 year ago

↳ replying to Corazon

Exactly, testing internal controls is about ensuring they are operating effectively.

Claribel 1 year ago

↳ replying to Corazon

I agree, D doesn't make sense. It's all about testing control activities.

Roxane 1 year ago

↳ replying to Corazon

Haha, D is definitely out of place here. It's all about the control activities.

Mozell 1 year ago

↳ replying to Corazon

A is the correct choice, focusing on whether control activities are effective.

Matthew 1 year ago

↳ replying to Corazon

Exactly, it's all about testing internal controls, not materiality for planning.

Wilburn 1 year ago

↳ replying to Corazon

I know, right? D doesn't make any sense in this context.

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.

Nadine 1 year ago

I agree with Noel. Testing internal control is all about ensuring the control activities are effective.

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.

Kendra 1 year ago

↳ replying to An

User 2: Yeah, tests of controls are for that purpose.

Osvaldo 1 year ago

↳ replying to An

User 1: A) The control activities are operating effectively.

Barrett 2 years 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.

Herminia 1 year ago

↳ replying to Barrett

So, it's clear that the main focus of sampling for internal control is to assess the effectiveness of control activities.

Jolene 1 year ago

↳ replying to Barrett

I think we can rule out option B and D, as they are not directly related to testing internal controls.

Florencia 1 year ago

↳ replying to Barrett

Definitely, testing internal controls is crucial for ensuring effectiveness in operations.

Carlee 1 year ago

↳ replying to Barrett

I agree, option A is the right choice. It's all about checking if the control activities are working well.

Noel 2 years ago

I think the answer is A) The control activities are operating effectively.

AICPA CPA-Auditing Exam - Topic 3 Question 66 Discussion