MaoEn/USCPA_AUD_Data huggingface dataset:
When an auditor reports on a nonissuer's compliance with aspects of contractual agreements in a report separate from the audit report on the financial statements, the report should include a statement that:
A.
Instances of noncompliance have been disclosed to those charged with governance.
B.
The audit was directed primarily toward obtaining knowledge regarding compliance.
C.
The report is being provided in connection with the audit of the financial statements.
D.
Includes interpretations made by the auditors relating to the contractual agreements.,"Choice "C" is correct. If an auditor issues a report on a client's compliance with contractual agreements in a separate report on the financial statements, the report should only provide negative assurance and must indicate that the auditor has expressed an unmodified or qualified opinion in the financial statements.
Choice "A" is incorrect. If an auditor identifies instances of noncompliance, the report on compliance would describe the noncompliance. It would not need to indicate that those instances of noncompliance have been disclosed to those charged with governance.
Choice "B" is incorrect. If an auditor issues a report on a client's compliance with contractual agreements, the report should only provide negative assurance. Negative assurance means that nothing came to the auditor's attention that caused the auditor to believe that the entity failed to comply.
Choice "D" is incorrect. The report would not include a statement that includes interpretations made by the auditors relating to the contractual agreements. The report would provide negative assurance and indicate the report issued on the financial statements."
An accountant's compilation report on a financial projection that does not contain a range should include a statement that:
A.
The accountant's responsibility to update the report for future events and circumstances is limited to one year.
B.
The projection is limited to presenting, in the form of financial statements, information that is the accountant's representation.
C.
The compilation includes an evaluation of the support for the assumptions underlying the projection.
D.
There will usually be differences between the projected and actual results because events and circumstances frequently do not occur as expected.,"Choice "D" is correct. An accountant's compilation report on a financial projection should include a statement that there will usually be differences between the projected and actual results because events and circumstances frequently do not occur as expected.
Choice "A" is incorrect. An accountant's compilation report on a financial projection should include a statement that the accountant has no responsibility to update the report for future events and circumstances occurring after the date of the report.
Choice "B" is incorrect. Management, not the accountant, is responsible for the projected financial statements.
Choice "C" is incorrect. An accountant's examination report, not compilation report, on a financial projection should include a statement that the examination includes an evaluation of the support for the assumptions underlying the projection."
With respect to the expression of an opinion regarding whether a client maintained effective internal control over financial reporting:
A.
The auditor of a nonissuer must express an opinion whenever significant deficiencies or material weaknesses are noted.
B.
The auditor of a nonissuer may express an opinion as a result of a financial statement audit.
C.
The auditor of a nonissuer may express an opinion as a result of an audit engagement.
D.
The auditor of a nonissuer must express an opinion in every financial statement audit.,"Choice "C" is correct. The auditor of a nonissuer may be engaged to express an opinion on the design and/or operating effectiveness of the entity's internal control. This is considered an audit engagement. Note that an audit of internal control should be integrated with an audit of the financial statements.
Choice "A" is incorrect. While an auditor of a nonissuer is required to communicate significant deficiencies or material weaknesses to management and those charged with governance, this type of report does not provide an opinion on the operating effectiveness of the entity's internal control.
Choice "B" is incorrect. The auditor of a nonissuer may not express an opinion as a result of a financial statement audit, but may report on significant deficiencies or material weaknesses noted during the audit. The report on control deficiencies noted should specifically state that the auditor is not expressing an opinion on the effectiveness of internal control.
Choice "D" is incorrect. A financial statement audit includes consideration of internal control as a basis for designing audit procedures, not as a basis for expressing an opinion. An auditor of a nonissuer may report on significant deficiencies or material weaknesses noted during the audit, but is prohibited from expressing an opinion based solely on the audit."
When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, an auditor would be least likely to consider which of the following factors?
A.
The evaluation of the operating effectiveness of the controls.
B.
The type of available evidential matter pertaining to the effectiveness of the entity’s internal control.
C.
Preliminary judgments about the effectiveness of internal control.
D.
The extent of recent changes in the entity and its operations.,"Choice “A” is correct. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would be least likely to consider the evaluation of the operating effectiveness of the controls. The evaluation of the operating effectiveness of controls occurs after the planning stage.
Choice “B” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider the type of available evidential matter pertaining to the effectiveness of the entity’s internal control.
Choice “C” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider preliminary judgments about the effectiveness of internal control.
Choice “D” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider the extent of recent changes in the entity and its operations."
When an auditor reports on a nonissuer's compliance with aspects of contractual agreements in a report separate from the audit report on the financial statements, the report should include a statement that:
A.
Instances of noncompliance have been disclosed to those charged with governance.
B.
Includes interpretations made by the auditors relating to the contractual agreements.
C.
The report is being provided in connection with the audit of the financial statements.
D.
The audit was directed primarily toward obtaining knowledge regarding compliance.,"Choice "C" is correct. If an auditor issues a report on a client's compliance with contractual agreements in a separate report on the financial statements, the report should only provide negative assurance and must indicate that the auditor has expressed an unmodified or qualified opinion in the financial statements.
Choice "B" is incorrect. The report would not include a statement that includes interpretations made by the auditors relating to the contractual agreements. The report would provide negative assurance and indicate the report issued on the financial statements.
Choice "D" is incorrect. If an auditor issues a report on a client's compliance with contractual agreements, the report should only provide negative assurance. Negative assurance means that nothing came to the auditor's attention that caused the auditor to believe that the entity failed to comply."
An auditor conducting a compliance audit will design and perform additional audit procedures in response to the assessed risk of material noncompliance. These procedures will include tests of controls if:
A.
Tests of controls are required by the governmental audit requirement.
B.
The auditor has been engaged to perform an organization-wide audit.
C.
The auditor has determined a deficiency in the design of internal control over compliance.
D.
The auditor's expectation of the operating effectiveness of controls over compliance is otherwise unknown.,"Choice "A" is correct. Tests of the operating effectiveness of controls may be required if any one of the following exist:
The risk assessment includes an explanation of the operating effectiveness of controls over compliance,
Substantive procedures do not provide enough evidence to support a conclusion, or
Tests of controls are required by the applicable governmental audit requirements.
Choice "B" is incorrect. The engagement to perform an entity-wide audit does not have direct bearing on whether tests of controls are performed.
Choice "C" is incorrect. The design of internal controls over compliance are not as significant as their operation for determination of the need for tests of controls.
Choice "D" is incorrect. Tests of controls are appropriate when the auditor has developed an expectation regarding the operation of controls; not when the operating effectiveness is unknown."
When performing an audit of a government entity under generally accepted government auditing standards, an auditor:
A.
May use the information obtained in any way the auditor deems appropriate.
B.
Makes decisions to ensure that statements are not materially misstated.
C.
May use a specialist with required professional skills, if needed, at the auditor's discretion.
D.
Is primarily responsible to the director of the Government Accountability Office.,"Choice "C" is correct. An auditor of a government entity may use a specialist on the engagement. The use of specialists is permitted under GAAS. GAAS and GAGAS are the sources of standards for governmental audits.
Choice "A" is incorrect. Audits of government entities are performed under GAAS and GAGAS. Under these standards, the auditor may not use information obtained in any way. The auditor's responsibility is to assess information obtained.
Choice "B" is incorrect. Audits of government entities are performed under GAAS and GAGAS. Under these standards, the financial statements are the responsibility of management. Therefore, the auditor may not make decisions to ensure that the statements are not materially misstated.
Choice "D" is incorrect. Audits of government entities are performed under GAAS and GAGAS. Therefore, the auditor of a government entity is primarily responsible to those charged with governance. The Government Accountability Office (GAO) plays a significant role in establishing government auditing standards."
When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, an auditor would be least likely to consider which of the following factors?
A.
The evaluation of the operating effectiveness of the controls.
B.
Preliminary judgments about the effectiveness of internal control.
C.
The extent of recent changes in the entity and its operations.
D.
The type of available evidential matter pertaining to the effectiveness of the entity’s internal control.,"Choice “A” is correct. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would be least likely to consider the evaluation of the operating effectiveness of the controls. The evaluation of the operating effectiveness of controls occurs after the planning stage.
Choice “B” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider preliminary judgments about the effectiveness of internal control.
Choice “C” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider the extent of recent changes in the entity and its operations.
Choice “D” is incorrect. When planning an audit of the effectiveness of the entity’s internal control in an integrated audit of a nonissuer, a practitioner would likely consider the type of available evidential matter pertaining to the effectiveness of the entity’s internal control."
When auditing an entity's financial statements in accordance with Government Auditing Standards, an auditor should prepare a written report on the auditor's:
A.
Opinion on the entity's attainment of the goals and objectives specified by applicable laws and regulations.
B.
Field work and procedures that substantiated the auditor's specific findings and conclusions.
C.
Understanding of internal control and assessment of control risk.
D.
Identification of the causes of performance problems and recommendations for actions to improve operations.,"Choice "C" is correct. Government Auditing Standards require that the auditor issue a written report on internal control in all audits. As part of this reporting requirement, the auditor must describe the scope of the auditor's work in obtaining an understanding of internal control and his or her assessment of control risk.
Choice "A" is incorrect. The objective of the audit of the financial statements is to provide an opinion on the financial statements, not on the entity's attainment of goals and objectives.
Choice "B" is incorrect. A report on fieldwork and procedures that substantiated the auditor's specific findings and conclusions would not be prepared as part of a GAGAS audit.
Choice "D" is incorrect. In the report, the auditor would identify deficiencies, significant deficiencies, and material weaknesses in internal control over compliance (not performance problems) found in the examination of the entity's internal control."
Which of the following engagements require the practitioner to be independent in order to issue a report, even though the report contains no assurance?
A.
Compilation
B.
Preparation
C.
Review
D.
Agreed-upon procedure,"Choice “D” is correct. Agreed-upon procedure engagements require the practitioner to be independent in order to issue a report, even though the report contains no assurance.
Choice “A” is incorrect. An accountant does not need to be independent to issue a compilation report. An accountant who lacks independence may issue a compilation report as long as the accountant discloses a lack of independence in the report.
Choice “B” is incorrect. A preparation engagement does not require the practitioner to be independent nor does the practitioner have to assess independence.
Choice “C” is incorrect. A review requires the practitioner to be independent; however, the report contains limited assurance."
When a CPA examines a client's projected financial statements, the CPA's report should:
A.
State that the CPA performed procedures to evaluate management's assumptions.
B.
Include the CPA's opinion on the client's ability to continue as a going concern.
C.
Explain the principal differences between historical and projected financial statements.
D.
Refer to the CPA's auditor's report on the historical financial statements.,"Choice "A" is correct. When a CPA examines projected financial statements, the standard report should include a statement that the examination "…included such procedures as we considered necessary to evaluate both the assumptions used by management and the preparation and presentation of the projection."
Choice "B" is incorrect. The accountant's report would not express an opinion on the client's ability to continue as a going concern.
Choice "C" is incorrect. The accountant's report on the examination of projected financial statements would not explain the principal differences between historical and projected financial statements.
Choice "D" is incorrect. The accountant's report on the examination of projected financial statements would not make any reference to the CPA's auditor's report on the historical financial statements."
Computer Services Company (CSC) processes payroll transactions for schools. Drake, CPA, is engaged to provide a SOC 1® Type 1 report. CSC's internal controls are relevant to the schools' internal control, so Drake's report will be useful in providing the schools' independent auditors with information necessary to plan their audits. Drake's report should contain:
A.
Drake's description of the service organization's system, with an acknowledgement by management of the accuracy of Drake's description.
B.
Management's description of the service organization's system.
C.
Drake's opinion on the operating effectiveness of the service center's internal controls.
D.
A paragraph indicating the basis for the user auditor to reduce the assessment of control risk below maximum for areas of the entity's accounting that are affected by the service organization.,"Choice "B" is correct. A SOC 1® Type 1 report should include management's description of the service organization's system.
Choice "A" is incorrect. Drake does not provide a description of the service organization's system; this is provided by management.
Choice "C" is incorrect. The service auditor's Type 1 report is not intended to provide evidence of operating effectiveness. That requires a SOC 1® Type 2 report.
Choice "D" is incorrect. No paragraph indicating the basis for the assessment of control risk is included in Drake's report."
Which of the following is not a difference between a financial statement audit and an audit of internal control for nonissuers?
A.
In a financial statement audit, communication of significant deficiencies should include restricted use language. In an audit of internal control, no restriction on the use of the report is required.
B.
An auditor’s consideration of internal control in a financial statement audit is more limited than that of an auditor engaged to examine the effectiveness of internal control.
C.
An opinion on financial statements is over a period of time, and an opinion of internal control is at a point in time.
D.
In a financial statement audit, communication of significant deficiencies must be made by the report release date, whereas in an audit of internal control, the communication must be made within 60 days of the report release date.,"Choice “D” is correct. In a financial statement audit, communication of significant deficiencies must be made within 60 days of the report release date, whereas in an audit of internal control, the communication must be made by the report release date.
Choice “A” is incorrect. This is a difference between a financial statement audit and an audit of internal control. In a financial statement audit, communication of significant deficiencies should include restricted use language, whereas in an audit of internal control, no restriction on the use of the report is required.
Choice “B” is incorrect. This is a difference between a financial statement audit and an audit of internal control. An auditor’s consideration of internal control in a financial statement audit is more limited than that of an auditor engaged to examine the effectiveness of internal control.
Choice “C” is incorrect. This is a difference between a financial statement audit and an audit of internal control. An opinion on financial statements is over a period of time, and an opinion of internal control is at a point in time"
In an integrated audit of a nonissuer, which of the following is the responsibility of an auditor with regard to testing controls at a company with multiple business units?
A.
Testing controls over only certain specific risks at all business units of the company.
B.
Testing controls over all risks at all business units of the company.
C.
Testing controls over all risks at business units that are material to the company's consolidated financial statements.
D.
Testing controls over specific risks at business units that are material to the company's consolidated financial statements.,"Choice "D" is correct. An auditor that is testing controls at a company with multiple business units should test controls over specific risks at business units that are material to the company's consolidated financial statements.
Choice "A" is incorrect.  An auditor that is testing controls at a company with multiple business units does not need to test controls at all business units. The auditor should test controls over specific risks at business units that are material to the company's consolidated financial statements.
(Note: Be careful when selecting answers that contain absolute terms such as all, always, only, etc.)
Choice "B" is incorrect. An auditor that is testing controls at a company with multiple business units does not need to test all risks at all business units.
Choice "C" is incorrect. The auditor should test certain specific risks, not all risks, at business units that are considered material to the company's consolidated financial statements."
Management’s report on internal control included a statement that the cost of correcting a weakness noted by the auditors would exceed the benefits derived from implementing the correction. What is the appropriate response by the auditor?
A.
The auditor should disclaim an opinion on the cost-benefit statement.
B.
No response is required.
C.
The auditor should verify the accuracy of the cost-benefit statement.
D.
The auditor should express an opinion on the cost-benefit statement.,"Choice “A” is correct. If management’s report contains a cost-benefit statement, the auditor should read the additional information to ensure there are no material inconsistencies with management's report and disclaim an opinion on the statement.
Choice “B” is incorrect. A response is required by the auditor. If management’s report contains a cost-benefit statement, the auditor should disclaim an opinion on the statement.
Choice “C” is incorrect. The auditor is not required to verify the accuracy of the cost-benefit statement; the auditor should disclaim an opinion on the statement.
Choice “D” is incorrect. The auditor should not express an opinion on the cost-benefit statement; the auditor should disclaim an opinion on the statement."
Which of the following is not a role of the risk assessment in an integrated audit of a nonissuer?
A.
Selecting controls to test.
B.
Concluding on the effectiveness of a given control.
C.
Determining significant accounts and relevant assertions.
D.
Determining evidence necessary to conclude on the effectiveness of a given control.,"Choice “B” is correct. The auditor’s conclusion on the operating effectiveness of a given control is not a role of the risk assessment process. The auditor’s conclusion on the operating effectiveness of internal control occurs after the risk assessment process.
Choice “A” is incorrect. Selecting controls to test is part of the risk assessment process in an integrated audit of a nonissuer.
Choice “C” is incorrect. Determining significant accounts and relevant assertions is part of the risk assessment process in an integrated audit of a nonissuer.
Choice “D” is incorrect. Determining evidence necessary to conclude on the effectiveness of a given control is part of the risk assessment process in an integrated audit of a nonissuer."
Which of the following cognizant agencies is most likely to be assigned to an auditee?
A.
The federal agency that is located within the auditee's region.
B.
The federal agency that provides the most funding to the auditee.
C.
An independent federal agency that does not provide funding to the auditee.
D.
A preselected federal agency whose sole purpose is to monitor single audits.,"Choice "B" is correct. A cognizant agency for the audit is typically the federal awarding agency that provides the most amount of direct funding to a nonfederal entity.
Choice "A" is incorrect. The assigned cognizant agency may or may not be located within the auditee's region.