Free CPA AUD (Auditing & Attestation) Forming Conclusions and Reporting Practice Questions
Forming conclusions and reporting on the CPA AUD exam tests unmodified and modified audit opinions, emphasis-of-matter paragraphs, going concern assessments, and reporting on internal controls under PCAOB standards.
Sample Questions
Question 1
Easy
Under AU-C 706, an emphasis-of-matter paragraph in the auditor's report is used to:
Solution
C is correct.
Under AU-C 706.06-.07, an emphasis-of-matter paragraph is used when the auditor considers it necessary to draw users' attention to a matter that is appropriately presented or disclosed in the financial statements and is of such importance that it is fundamental to users' understanding. Common examples include significant uncertainties (such as going concern) or accounting changes. The opinion remains unmodified.
Under AU-C 706.06-.07, an emphasis-of-matter paragraph is used when the auditor considers it necessary to draw users' attention to a matter that is appropriately presented or disclosed in the financial statements and is of such importance that it is fundamental to users' understanding. Common examples include significant uncertainties (such as going concern) or accounting changes. The opinion remains unmodified.
Question 2
Medium
Which of the following statements is required to be included in a standard review report issued under AR-C 90?
Solution
Under AR-C 90, the standard review report must include a statement that a review is substantially less in scope than an audit, the objective of which is to express an opinion on the financial statements. This disclosure is required to clarify the level of assurance provided. A review does not involve obtaining an understanding of internal control, confirming balances, or testing controls—those are audit procedures under AU-C sections.
Question 3
Hard
A county government expends federal awards exceeding the single audit threshold and engages an auditor to perform the required audits. Which statement correctly distinguishes the Yellow Book report from the single audit reports?
Solution
The Yellow Book report and single audit reports serve different purposes. The Yellow Book report addresses compliance with laws, regulations, contracts, and grant agreements that have a material effect on the financial statements — it describes scope and reports findings but does not express an opinion. The single audit under Uniform Guidance layers on top of the Yellow Book audit and includes an opinion on compliance for each major program, an opinion on internal control over compliance for major programs, a schedule of findings and questioned costs, and a summary schedule of prior audit findings. Both report sets are generally publicly available.