AICPA 2019 Auditing Newly Released MCQs—Medium Difficulty

2019 AICPA Newly Released Questions—Auditing
AUDITING
2019 AICPA Newly
Released MCQs
Page 1 of 41
2019 AICPA Auditing Newly Released MCQs—Medium (Moderate) Rating
1. CPA-08865
If a statement from the Statements on Standards for Attestation Engagements (SSAE) provides that a
procedure or action is one that the practitioner "should consider," then which of the following
interpretations is correct?
A. The practitioner and management must agree on how the procedure will be performed.
B. The consideration of the procedure is presumptively required, whereas carrying out the procedure
is not required.
C. The SSAEs use this term for special attestation engagements when referring to unusual situations
outside the scope of the typical attestation engagements.
D. Carrying out the procedure or action is required in all cases.
Unit & Module to be Assigned To: A-5, M-3

Question Title: AICPA Released 2019
Include In: HW, Acct. Master
Representative Task: AI-A3.1
Skill Level (Must be R&U or Application Only): R&U
Difficulty Rating Medium
Page Reference: 30
Correct Answer Choice: B
ANSWER:
Choice "B" is correct. If a statement from the SSAE provides that a procedure or action is one that the
practitioner "should consider," this means that the procedure is presumptively required, whereas carrying
out the procedure is not required. In other words, the auditor must comply with the requirement in all
cases, except in rare circumstances. In rare circumstances, the practitioner may judge it necessary to
depart from a relevant presumptively mandatory requirement and not perform the "should consider"
procedure. In such circumstances, the practitioner should perform alternative procedures to achieve the
intent of that requirement.
Choice "A" is incorrect. The term "should consider" does not mean that the practitioner and management
must agree on how the procedure will be performed.
Choice "C" is incorrect. The term "should consider" is used throughout attestation standards to mean a
presumptively mandatory requirement. It does not apply to just "special attestation engagements."
Choice "D" is incorrect. The term "must" indicates an unconditional requirement; carrying out the
procedure or action is required in all cases.
Page 2 of 41
2. CPA-08870
Bingham, a CPA, has been asked to join a local bank's board of directors. In which of the following
scenarios would such a position be acceptable for Bingham?
A. One of Bingham's clients has several business loans outstanding with the bank.
B. Several of Bingham's clients have savings accounts at the bank.
C. One of Bingham's clients, who is struggling financially, is in the loan application process at the
bank.
D. Several of Bingham's clients are in negotiations with this and other banks for operating loans.

Representative Task: AI-B1.3
Skill Level (Must be R&U or Application Only): Application
Page Reference: 74
ANSWER:
Choice "B" is correct. It would be acceptable for Bingham to join the board of directors of a local bank
where several of Bingham's clients have savings accounts.
Choice "A" is incorrect. It would not be acceptable for Bingham to join the board of directors of a bank
where one his clients has several business loans outstanding with that bank. Bingham's fiduciary
responsibilities for the bank may create threats to his compliance with the integrity and objectivity rule.
Bingham might not be objective related to this banking relationship. Joining the board may also create a
threat to independence.
Choices "C" and "D" are incorrect. It would not be acceptable for Bingham to join the board of directors of
a bank where one his clients is in the loan application process or in negotiations for a loan with the bank,
because both situations may create several threats. For example, failure to disclose information that is
useful to the business would be a breach of the director's fiduciary responsibilities, and disclosing the
client's confidential information would be a violation of the Confidential Client Information Rule. Joining
the board may also create a threat to independence.
Page 3 of 41
3. CPA-08872
In order to respond to the increased risks that could be present in the initial audit of an entity, an external
auditor should consider the assignment of:
A. Internal audit personnel with appropriate levels of capabilities and competence.
B. Accounting personnel with appropriate levels of capabilities and competence.
C. Senior management with appropriate levels of capabilities and competence.
D. External audit personnel with appropriate levels of capabilities and competence.

Representative Task: AI-C1.1
Page Reference: 20
Correct Answer Choice: D
ANSWER:
Choice "D" is correct. In order to respond to the increased risks that could be present in the initial audit of
an entity, an external auditor should consider the assignment of external audit personnel with appropriate
levels of capabilities and competence.
Choice "A" is incorrect. An appropriate response to increased risks is to assign experienced external audit
personnel to the engagement. An external auditor may consider utilizing internal audit personnel for the
audit; however, it would be for areas that are low risk.
Choice "B" is incorrect. An external auditor would not assign accounting personnel at the entity to help
with the audit. They most likely would not be objective when reviewing their own work.
Choice "C" is incorrect. An external auditor would not assign senior management to help with the audit.
They most likely would not be objective when reviewing their own work.
Page 4 of 41
4. CPA-08874
Which of the following communications between the auditor with final responsibility for an engagement
and the audit engagement team regarding the susceptibility of a client's financial statements to material
misstatements due to error or fraud is required by auditing standards?
A. Explaining all procedures to be performed on the engagement to detect significant errors or
fraudulent activity.
B. Discussing the need to maintain a questioning mind and to exercise professional skepticism
throughout the audit.
C. Explaining the firm's strategy for managing and controlling legal liability due to fraud.
D. Discussing the firm's policy for allocating budgeted audit hours to detect fraud.

Representative Task: AI-F1.2
Page Reference: 5
ANSWER:
Choice "B" is correct. The auditor with final responsibility (e.g., partner) and the audit engagement team
are required by auditing standards to discuss the need to maintain a questioning mind and to exercise
professional skepticism throughout the audit.
Choice "A" is incorrect. The auditor with final responsibility is not required to explain all procedures to be
performed on the engagement to detect significant errors or fraudulent activity.
Choice "C" is incorrect. The auditor with final responsibility is not required to explain the firm's strategy for
managing and controlling legal liability due to fraud.
Choice "D" is incorrect. The auditor with final responsibility is not required to discuss the firm's policy for
allocating budgeted audit hours to detect fraud. This may be discussed during the fraud brainstorming
meeting but it is not required by auditing standards.
Page 5 of 41
5. CPA-08876
While planning an engagement to issue a report on the application of the requirements of an applicable
financial reporting framework to a specific transaction of a nonissuer, a reporting accountant should
obtain an understanding of the:
A. Financial expertise of the users of the reporting accountant's report.
B. Risk appetites of parties to the specific transaction.
C. Form and substance of the specific transaction.
D. Internal control activities related to the specific transaction.

Representative Task: AII-A1.1
Page Reference: 101
Correct Answer Choice: C
ANSWER:
Choice "C" is correct. While planning an engagement to issue a report on the application of the
requirements of an applicable financial reporting framework to a specific transaction of a nonissuer, a
reporting accountant should obtain an understanding of the form and substance of the specific
transaction.
Choice "A" is incorrect. A reporting accountant is not required to obtain an understanding of the financial
expertise of the users of the report.
Choice "B" is incorrect. A reporting accountant is not required to understand the risk appetites of parties
to the specific transaction.
Choice "D" is incorrect. A reporting accountant is not required to obtain an understanding of the internal
control activities related to the specific transaction.
Page 6 of 41
6. CPA-08877
Risks relevant to financial reporting can arise due to which of the following circumstances?
A. Corrective actions implemented by management.
B. Performance reviews of employees.
C. Board of directors' commitment to competence.
D. Rapid growth in the entity's operations.

Representative Task: AII-B2.1
Page Reference: 46
ANSWER:
Choice "D" is correct. Risks relevant to financial reporting can arise due to rapid growth in the entity's
operations.
Choice "A" is incorrect. If management implements corrective actions, this likely would result in a
decrease in risks relevant to financial reporting.
Choice "B" is incorrect. Performance reviews of employees is unlikely to increase risks relevant to
financial reporting. This most likely would result in a decrease to the risks relevant to financial reporting,
as it supports a strong control environment.
Choice "C" is incorrect. Board of directors' commitment to competence likely would result in a decrease in
risks relevant to financial reporting.
Page 7 of 41
7. CPA-08878
A nonissuer uses a service organization whose services are part of the nonissuer's system of internal
control. In the integrated audit, how does an auditor evaluate whether the service auditor's report on
controls provides sufficient appropriate evidence to support an opinion on internal controls over financial
reporting?
A. By inquiring of the service auditor's reputation only from the company's outside attorney.
B. By observing the service auditor to determine the level of knowledge about the entity under audit
during the first week of the audit fieldwork.
C. By assessing the results of the tests of controls and the service auditor's opinion on the operating
effectiveness of the controls.
D. By performing a background check of the service auditor.

Representative Task: AII-C3.2
Page Reference: 60
ANSWER:
Choice "C" is correct. In the integrated audit, a user auditor evaluates whether the service auditor's report
on controls provides sufficient appropriate evidence to support an opinion on internal controls over
financial reporting by assessing the results of the tests of controls and the service auditor's opinion on the
operating effectiveness of the controls.
Choice "A" is incorrect. The user auditor should be satisfied about the reputation of the service auditor.
However, the user auditor typically obtains this information by making inquiries about the service auditor
to the service auditor's professional organization (e.g., State Board of Accountancy). It is unlikely that the
user auditor would inquire about the service auditor's reputation by only asking the company's outside
attorney.
Choice "B" is incorrect. The user auditor is not required to observe the service auditor's procedures. The
user auditor may rely on the report issued by the service auditor as long as the user auditor is satisfied
about the independence and competence of the service auditor.
Choice "D" is incorrect. A user auditor should be satisfied about the competence and independence of the
service auditor. Typically, the user auditor will not perform a background check on the service auditor.
Instead, the user auditor may make inquiries of other practitioners or the service auditor's professional
organization and inquire about whether the service auditor is subject to regulatory oversight.
Page 8 of 41
8. CPA-08882
A company has an internal audit function and is in a regulated industry. Which of the following groups
should the auditor approach to inquire about the risks of fraud within the entity?
A. Management, internal audit, and audit committee
B. Internal audit, regulators, and management
C. Management, sales department head, and audit committee
D. Internal audit, suppliers, and management

Representative Task: AII-E1.1
Page Reference: 5
Correct Answer Choice: A
ANSWER:
Choice "A" is correct. An external auditor should inquire of management, internal audit, and the audit
committee regarding the risks of fraud within the entity.
Choice "B" is incorrect. An auditor should inquire of certain entity personnel regarding their views of fraud
risk. An auditor is unlikely to approach regulators to inquire about the risks of fraud within the entity.
Choice "C" is incorrect. The sales department head may be aware of fraud risks that relate to sales, but
most likely would not be able to identify risks of fraud related to the entity as a whole.
Choice "D" is incorrect. An auditor should inquire of certain entity personnel regarding their views of fraud
risk. An auditor is unlikely to approach the client's suppliers to inquire about the risks of fraud within the
entity.
Page 9 of 41
9. CPA-08885
An auditor who identifies a potential fraud that is significant within the context of the audit under generally
accepted government auditing standards would most appropriately respond first in which of the following
manners?
A. Recommend a separate engagement to determine whether fraud has occurred.
B. Extend audit procedures as necessary to determine whether fraud has occurred.
C. Refer investigation of the potential fraud to the party with oversight responsibility.
D. Communicate the potential fraud directly to management.

Page Reference: 76
ANSWER:
Choice "B" is correct. An auditor who identifies a potential fraud that is significant within the context of the
audit under generally accepted government auditing standards would most appropriately respond by first
extending audit procedures as necessary to determine whether fraud has occurred.
Choice "A" is incorrect. An auditor needs to extend procedures to figure out whether fraud has occurred.
This is performed as part of the current engagement. There is no need to recommend that a separate
engagement be performed to determine whether fraud has occurred.
Choice "C" is incorrect. The auditor should first extend procedures to determine whether fraud has
occurred. If, after performing further procedures, the auditor identifies or still suspects fraud, then the
auditor should inform the party that has oversight.
Choice "D" is incorrect. An auditor should first perform additional procedures. If, after performing further
procedures, the auditor identifies or still suspects fraud, then the auditor should communicate the fraud to
management.
Page 10 of 41
10. CPA-08891
An auditor randomly samples 50 out of 1,000 items and discovers an overstatement of $3,000. What is
the projected misstatement for the entire population?
A. $150,000
B. $120,000
C. $60,000
D. $48,000

Representative Task: AIII-B1.2
Page Reference: 88
ANSWER:
Choice "C" is correct. Selection of 50 of 1,000 results in a sample that is 5 percent (50 ÷ 1,000 = 0.05) of
the population. The overstatement of $3,000 is projected to the total population as $60,000 (= $3,000 ÷
0.05). Alternatively, the sample factor is 20 (1,000 population ÷ 50 sample size), and each of those
groups of 20 has an estimated error of $3,000. Therefore, the projected misstatement is $3,000 × 20 =
$60,000.
Page 11 of 41
11. CPA-08893
After receiving responses to accounts receivable confirmations, the auditor determined that the evidence
was not sufficient to form a conclusion regarding the accounts receivable balance. Which of the following
actions should the auditor take next concerning the accounts receivable balance?
A. Request additional confirmations and perform alternative procedures.
B. Issue a qualified audit opinion on the client's financial statements.
C. Withdraw from the engagement and issue a disclaimer of opinion.
D. Ask the internal auditor to evaluate the valuation of accounts receivable.

Representative Task: AIII-C2.2
Page Reference: 9
ANSWER:
Choice "A" is correct. If the auditor determined that there is not enough evidence to form a conclusion on
the accounts receivable balance, then the auditor should request additional confirmations (increase the
sample size) and perform alternative procedures (e.g., verify subsequent payment of accounts
receivable).
Choice "B" is incorrect. An auditor should try to perform additional or alternative audit procedures to
obtain sufficient appropriate evidence first. If the auditor is unable to gather enough evidence after
performing additional and alternative procedures, then the auditor may consider issuing a qualified
opinion due to the insufficient evidence.
Choice "C" is incorrect. An auditor may perform additional and alternative procedures to gather sufficient
evidence. The auditor does not need to withdraw from the engagement. In addition, if the auditor
withdraws from the engagement, then no opinion is issued.
Choice "D" is incorrect. The external auditor, not the internal auditor, is responsible for evaluating and
forming the conclusion on accounts receivable.
Page 12 of 41
12. CPA-08895
Which of the following sources of corroborating information would most likely increase the assurance that
an auditor of a nonissuer obtains from management's representations?
A. Reports of performance measurement routinely prepared for management's review.
B. Minutes of meetings of the entity's strategic planning committee.
C. Oral evidence gained from the auditor's discussion with employees.
D. A confirmation received from the entity's bank.

Page Reference: 41
ANSWER:
Choice "D" is correct. External evidence, such as a confirmation received from the entity's bank, is most
likely to increase the assurance that an auditor obtains from management's representations.
Choice "A" is incorrect. Internal evidence, such as reports of performance measurement routinely
prepared for management's review, typically would not increase the assurance that an auditor obtains
from management's representations.
Choice "B" is incorrect. Obtaining additional internal evidence, such as from minutes of meetings of the
entity's strategic planning committee, as corroborating evidence typically would not increase the
assurance that an auditor obtains from management's representations.
Choice "C" is incorrect. Obtaining corroborating oral evidence for management's representations typically
would not increase the assurance that an auditor obtains from management's representations.
Page 13 of 41
13. CPA-08913
A successor auditor discovers a possible misstatement in a client's financial statements reported on by a
predecessor auditor. Which of the following actions should the successor auditor take next?
A. Advise the client to inform its audit committee of the possible misstatement.
B. Have the client's internal auditor perform an examination to determine if a misstatement exists.
C. Ask the client to arrange a meeting of the predecessor auditor, management, and the successor
auditor to discuss the matter.
D. Require the client to restate its financial statements before proceeding with the audit.

Page Reference: 44
ANSWER:
Choice "C" is correct. When a successor auditor discovers a possible misstatement in a client's financial
statements reported on by a predecessor auditor, the successor auditor should ask the client to arrange a
meeting of the predecessor auditor, management, and the successor auditor to discuss the matter.
Choice "A" is incorrect. When a successor auditor discovers a possible misstatement in a client's financial
statements reported on by a predecessor auditor, the first step is to arrange a meeting to discuss the
matter. The audit committee will typically be notified after the meeting has occurred and after procedures
confirm that a misstatement exists.
Choice "B" is incorrect. The external auditor (not internal auditor) should perform procedures to determine
whether a misstatement exists.
Choice "D" is incorrect. If, after further discussion and evidence has been obtained, there is a
misstatement in the prior financial statements, the auditor should advise the client to restate its financial
statements. This would occur after the meeting of the predecessor auditor, management, and the
successor auditor.
Page 14 of 41
14. CPA-08915
Which of the following statements is correct with regard to management use of a broker's quotation to
support a fair value estimate?
A. If the quotation is from the broker who initially sold the instrument, the evidence might be less
objective and might need supplementation.
B. A broker's quotation that is based on a cash flow methodology cannot be accepted.
C. The auditor is not required to obtain an understanding of the broker's methodology for obtaining the
fair value estimate.
D. A broker's quotation that is based on a combination of methodologies cannot be accepted.
Unit & Module to be Assigned To: A-4, M5

Representative Task: AIII-D2.1
Page Reference: 26
ANSWER:
Choice "A" is correct. If the quotation to support a fair value estimate is from the broker who initially sold
the instrument, the evidence might be less objective and might need supplementation. (The broker may
be biased because the broker sold it to the entity and may overstate the value of the instrument.)
Choice "B" is incorrect. A broker's quotation that is based on a cash flow methodology can be accepted. A
broker may use the market approach, the income approach (which includes using a cash flow
methodology), the cost approach, or a combination of these when measuring the fair value of an asset or
liability.
Choice "C" is incorrect. The auditor is required to obtain an understanding of the broker's methodology for
obtaining the fair value estimate.
Choice "D" is incorrect. A broker's quotation that is based on a combination of methodologies is
acceptable.
Page 15 of 41
15. CPA-08917
Which of the following is the auditor's primary means of obtaining corroboration of information furnished
by management concerning litigation, claims, and assessments?
A. The minutes of stockholders and directors meetings.
B. A letter of representation supplied by management.
C. A review of contracts, leases, loan agreements, and similar documents.
D. A letter of audit inquiry to the client's lawyer.

Page Reference: 46
ANSWER:
Choice "D" is correct. The letter of audit inquiry to the client's lawyer is the auditor's primary means of
obtaining corroboration of information furnished by management concerning litigation, claims, and
assessments.
Choice "A" is incorrect. Although the minutes of stockholders and directors meetings may provide
information about litigation, claims, or assessments, the primary source of corroborating information from
management regarding litigation, claims, or assessments is the letter of audit inquiry.
Choice "B" is incorrect. Although the management representation letter is important and should indicate
that management has disclosed to the auditor all relevant information related to litigation and claims, the
primary source of corroborating information from management regarding litigation, claims, or
assessments is the letter of audit inquiry.
Choice "C" is incorrect. Although review of contracts, leases, loan agreements and similar documents
may provide some information about litigation, claims, or assessments, the primary source of
corroborating information from management regarding litigation, claims, or assessments is the letter of
audit inquiry.
Page 16 of 41
16. CPA-08919
After the balance sheet date, an auditor's client suffers a material loss from a decline in value of
marketable securities. Which of the following actions should the auditor advise the client to take?
A. Adjust the financial statements to include the material loss.
B. Expand audit procedures to test current prices of marketable securities the client holds.
C. Restate the financial statements as if the material loss occurred at the balance sheet date, including
disclosure in the notes.
D. Disclose the material loss in the financial statements to assure that the financial statements are not
misleading.

Representative Task: AIII-G1.1
Page Reference: 77
ANSWER:
Choice "D" is correct. This is a nonrecognized subsequent event because it provides information about
conditions that occurred after the balance sheet date and it did not exist at the balance sheet date. The
auditor should advise the client to disclose the material loss in the financial statements to assure that the
financial statements are not misleading.
Choice "A" is incorrect. This is a nonrecognized subsequent event. The balance sheet should reflect the
fair value of the security as of the balance sheet date and should not be adjusted for a loss in market
value that occurred after the balance sheet date.
Choice "B" is incorrect. The auditor does not need to expand audit procedures to test current prices of
marketable securities that the client holds.
Choice "C" is incorrect. The auditor does not need to advise the client to restate the financial statements
for this event. The balance sheet should reflect the fair value of the security as of the balance sheet date
and should not be adjusted for a loss in market value that occurred after the balance sheet date.
Page 17 of 41
17. CPA-08922
Which of the following factors should most influence an auditor's decision to modify the audit opinion of an
issuer's financial statements?
A. The types of users expected to rely on the financial statements.
B. The effect of a misstatement on the financial statements taken as a whole.
C. Whether the auditor's opinion is based in part on the report of another auditor.
D. Uncertainties related to management's estimates as of the reporting date that are adequately
disclosed in the footnotes to the financial statements.

Representative Task: AIV-A1.3
Page Reference: 15
ANSWER:
Choice "B" is correct. The effect of a misstatement on the financial statements taken as a whole should
most likely influence an auditor's decision to modify the audit opinion.
Choice "A" is incorrect. The types of users expected to rely on the financial statements would be
considered when determining the materiality amount.
Choice "C" is incorrect. The auditor considers the total misstatements accumulated from the entire entity
(including misstatements identified by the component auditor) when determining the appropriate audit
opinion. The actual opinion rendered by another auditor on the component does not directly influence the
auditor's decision. (For example, a misstatement may be material to the component financial statements,
but the same misstated amount may not be material to the group financial statements. This is why the
auditor considers the aggregated misstatement for the financial statements as a whole rather than just the
opinion rendered on a specific component.)
Choice "D" is incorrect. An auditor is unlikely to modify the opinion related to uncertainties related to
management's estimates that are adequately disclosed. If an entity follows GAAP and the auditor obtains
sufficient appropriate evidence, there is no need to modify the type of opinion rendered.
Page 18 of 41
18. CPA-08923
What information should a practitioner include in the standard report on an examination of prospective
financial statements?
A. The prospective results might not be achieved.
B. The projection should be read only in conjunction with the audited historical financial statements.
C. There are no known material modifications that should be made as a result of applying the
procedure.
D. The practitioner assumes the responsibility to update the report for events and circumstances
occurring after the date of the report.

Representative Task: AIV-B1.1
Page Reference: 46
ANSWER:
Choice "A" is correct. An examination report on prospective financial statements states that the
prospective results might not be achieved.
Choice "B" is incorrect. An examination report on prospective financial statements does not state that the
projection should be read in conjunction with the audited financial statements.
Choice "C" is incorrect. An examination report does not state that there are no known material
modifications that should be made as a result of applying the procedure.
Choice "D" is incorrect. An examination report on prospective financial statements states that the
practitioner has no responsibility to update the report for events and circumstances occurring after the
date of the report.
Page 19 of 41
19. CPA-08924
Which of the following situations precludes an accountant from preparing financial statements that omit
substantially all disclosures required by the selected financial reporting framework?
A. The accountant is not independent.
B. The accountant becomes aware that the omission was undertaken with the intention of misleading
users of the financial statements.
C. The entity's management has given the accountant permission to disclose the omission in the
financial statements.
D. The entity's management has directed the accountant to omit the accountant's name from each
page of the financial statements.

Representative Task: AIV-C1.1
Page Reference: 15
ANSWER:
Choice "B" is correct. An accountant is precluded from preparing financial statements that omit
substantially all disclosures when the accountant becomes aware that the omission was undertaken with
the intent to mislead users of the financial statements.
Choice "A" is incorrect. An accountant does not need to be independent to prepare financial statements
that omit substantially all disclosures.
Choice "C" is incorrect. An accountant is allowed to prepare financial statements that omit substantially all
disclosures as long as the accountant discloses the omission in the financial statements and the omission
is not intended to mislead any person who is expected to use the financial statements.
Choice "D" is incorrect. An accountant's name is not required to be included in prepared financial
statements.
Page 20 of 41
20. CPA-08926
What is a service auditor's responsibility, if any, with regard to other information presented in a document
containing management's description of its system and the service auditor's report?
A. The auditor has no responsibility with regard to the other information presented.
B. To read the other information in order to identify material inconsistencies or misstatements.
C. To ensure that the format of the other information is consistent with industry practice.
D. To obtain supporting documentation for the other information.

Representative Task: AIV-E2.1
Page Reference: 53
ANSWER:
Choice "B" is correct. The service auditor should read the other information included in a document
containing management's description of its system and the service auditor's report to identify material
inconsistencies or misstatements.
Choice "A" is incorrect. The service auditor should read the other information to identify material
inconsistencies or misstatements because the service auditor's report is included in that document.
Choice "C" is incorrect. The service auditor is not required to verify that the other information is consistent
with industry practice. However, the service auditor should read the other information to identify material
inconsistencies or misstatements in relation to the information reported on.
Choice "D" is incorrect. The service auditor does not need to obtain supporting documentation for the
other information. The service auditor just needs to read the other information to verify that there are no
material inconsistencies or misstatements.
Page 21 of 41
2019 AICPA Auditing Newly Released MCQs—Difficult (Hard) Rating
21. CPA-08927
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.

Representative Task: AI-A2.1
Difficulty Rating Hard
Page Reference: 90
ANSWER:
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.
Choice "C" is incorrect. An independent federal agency that provides no funding is unlikely to be selected
to be the cognizant agency for the auditee. The cognizant agency is typically the agency that provides the
most funding to the auditee.
Choice "D" is incorrect. The assigned cognizant agency is based on the agency that provides the most
amount of direct funding. The assigned cognizant agency is not likely one whose sole purpose is to
monitor single audits.
Page 22 of 41
22. CPA-08928
A CPA in charge of the external audit of a nonissuer received an unexpected inheritance that includes
100 shares of the audit client's common stock. Which of the following actions should the CPA take to
avoid violating independence rules?
A. Decline to accept the inheritance.
B. Petition the AICPA for an independence exception from unforeseen circumstances.
C. Resign from the audit firm.
D. Sell or donate the stock within 30 days after receipt of ownership rights.

Representative Task: AI-B1.2
Page Reference: 71
ANSWER:
Choice "D" is correct. If, due to an unexpected event, an external auditor (or the auditor's immediate
family) receives a financial interest (such as shares of the audit client's stock), there is an exemption to
the independence rules as long as the external auditor meets the following criteria:
• The financial interest was unsolicited.
• The auditor disposes of the interest as soon as practicable but no later than 30 days after the auditor
becomes aware of it and has the right to dispose of the interest.
Choice "A" is incorrect. The external auditor may accept the inheritance and independence will not be
impaired as long as the auditor meets the exemption criteria, which are that the financial interest was
unsolicited and that the auditor disposes of the interest no later than 30 days after receipt of the rights.
Choice "B" is incorrect. The external auditor does not need to petition the AICPA for an independence
exception from unforeseen circumstances, as the Code of Conduct already provides an exception for this
situation.
Choice "C" is incorrect. The external auditor does not need to resign from the firm. If the interest is
material and the auditor is unable to dispose of the interest (for example, as in the case of stock options
or restricted stock), then the auditor should be removed from that particular audit client's engagement.
Page 23 of 41
23. CPA-08929
Which of the following matters should an accountant include when establishing an understanding with a
client regarding the services to be performed for a compilation engagement?
A. The effect that independence impairments, if present, will have on the expected form of the
accountant's report.
B. The dates on which the accountant will be present to observe the taking of the physical inventory.
C. The assistance that the accountant will receive from internal auditors in performing account
analyses.
D. The accountant's responsibility for the preparation and fair presentation of the financial statements.

Representative Task: AI-C2.4
Page Reference: 17
ANSWER:
Choice "A" is correct. An accountant should include the effect that independence impairments, if present,
will have on the expected form of the accountant's report when establishing an understanding with a client
regarding the services to be performed for a compilation engagement.
Choice "B" is incorrect. An accountant is not required to observe inventory in a compilation engagement.
This is a procedure performed in an audit engagement.
Choice "C" is incorrect. A compilation engagement typically does not require the assistance of internal
auditors. In addition, a compilation engagement does not require analysis of accounts.
Choice "D" is incorrect. The engagement letter includes a statement that management is responsible for
the preparation and fair presentation of the financial statements.
Page 24 of 41
24. CPA-08930
A group engagement team of a nonissuer should ask a component auditor to communicate whether it
complied with:
A. Ethical requirements relevant to the group audit.
B. State licensure requirements applicable to all group locations.
C. Generally accepted accounting principles relevant to the group audit.
D. Contract billing requirements related to the group audit.

Representative Task: AI-F1.1
Page Reference: 85
ANSWER:
Choice "A" is correct. A group engagement team of a nonissuer should ask a component auditor to
communicate whether it complied with ethical requirements relevant to the group audit and, in particular,
the independence requirements.
Choice "B" is incorrect. The component auditor does not need to meet the state licensure requirements
for all group locations. However, depending on the state licensure requirements, the component auditor
may need to meet the requirements for the location of the component that is being audited.
Choice "C" is incorrect. The component auditor is responsible for complying with generally accepted
auditing standards or PCAOB standards relevant to the group audit. GAAP provides the framework for
the auditor to evaluate whether the financial statements are fairly stated.
Choice "D" is incorrect. A group engagement team of a nonissuer is not required to ask the component
auditor about whether the component auditor complied with contract billing requirements related to the
group audit.
Page 25 of 41
25. CPA-08931
An auditor decides to perform substantive tests on a client's property and equipment balance as of an
interim date. The auditor has not obtained evidence about the operating effectiveness of relevant
controls. What additional work must be performed to extend the audit conclusions from the interim date to
the balance sheet date?
A. Tests of controls for the period between the beginning of the fiscal year and the interim date.
B. Tests of controls for the period between the interim date and the balance sheet date.
C. Substantive procedures for the period between the interim date and the balance sheet date.
D. Analytical comparison of the current-year interim balance with the prior-year interim balance.

Representative Task: AII-A2.1
Page Reference: 27
ANSWER:
Choice "C" is correct. Substantive procedures for the period between the interim date and the balance
sheet date should be performed to extend the audit conclusions from the interim date to the balance
sheet date.
Choices "A" and "B" are incorrect. An auditor is not required to test controls in order to conclude on the
balance for property and equipment.
Choice "D" is incorrect. Performing analytical procedures from current-year interim to prior-year interim
would not be helpful in extending the audit conclusions from the interim date to the balance sheet date.
Page 26 of 41
26. CPA-08932
Which of the following components of internal control contributes most to a strong control environment?
A. Controls are assessed through ongoing activities and evaluations.
B. Management adheres to internal control policies.
C. Duties are clearly defined and separated.
D. Policy manuals provide a clear understanding of internal controls.

Page Reference: 54
ANSWER:
Choice "B" is correct. The internal control component that contributes most to a strong control
environment is management's adherence to internal control policies. This provides evidence of a strong
tone at the top.
Choice "A" is incorrect. Controls that are assessed through ongoing activities and evaluations are part of
the monitoring (not control environment) component of internal control.
Choice "C" is incorrect. Duties that are clearly defined and separated are part of a good control
environment. However, auditors focus on the substance of the control environment rather than on the
form because the duties performed in the actual environment may be different from the stated duties
(e.g., in policies or in job postings.)
Choice "D" is incorrect. Policy manuals that provide a clear understanding of internal control are part of
the control environment. However, auditors focus on the substance of the control environment rather than
on the form because appropriate procedures may be established but not enforced.
Page 27 of 41
27. CPA-08933
Which of the following statements indicates that the auditor has gained a sufficient understanding of a
client's internal controls related to the sales order process?
A. The auditor noted in a narrative that the documentation for the sales order system showed the
printing of a shipment-exception report listing non-invoiced shipments.
B. In a statistically valid sample of 100 sales transactions, the auditor found five undiscovered
exceptions and concluded that the system was weak.
C. The auditor interviewed the company's supervisor of sales clerks and reviewed six shipment-
exception reports that were randomly selected and that showed significant unrecorded balances.
D. The auditor compared sales orders processed with processing clerk head count for three years and
noted that processed orders significantly declined while clerk head count remained the same.

Page Reference: 65
ANSWER:
Choice "A" is correct. This statement shows that the auditor has gained a sufficient understanding of a
client's internal controls related to the sales order process. A narrative is one way an auditor can describe
his or her understanding of internal control.
Choice "B" is incorrect. This statement relates to the actual testing of the control rather than obtaining an
understanding of the control because the auditor performed a "statistically valid sample" and concluded
on the sample.
Choice "C" is incorrect. This statement is referring to substantive testing (aka dollar balance testing)
because the auditor noticed significant unrecorded balances.
Choice "D" is incorrect. This statement does not provide information about internal controls related to the
sales order process. The statement provides information about efficiency of the sales order process
because it evaluates how many orders were processed as compared with clerk head count.
Page 28 of 41
28. CPA-08934
While performing procedures in planning an audit, the auditor's comparison of expectations with recorded
amounts yield unusual and unexpected relationships. The auditor should consider the results of the
analytical procedures in which of the following?
A. Determining planning materiality and acceptable error.
B. Identifying the risks of material misstatement due to fraud.
C. Identifying significant accounts.
D. Determining which controls to test.

Page Reference: 48
ANSWER:
Choice "B" is correct. The auditor should consider the results of analytical procedures performed in the
planning stage of the audit in identifying the risks of material misstatement due to fraud. This is one of the
primary purposes of performing analytical procedures during the planning stage.
Choice "A" is incorrect. Planning materiality is generally not based on the results of analytical procedures.
Planning materiality is usually based on factors such as annualized revenue or prior period financial
results.
Choice "C" is incorrect. The results of analytical procedures may or may not be considered when
identifying significant accounts. In identifying significant accounts, the auditor's consideration may include,
but is not limited to, the size and composition of the account, exposure to losses in the account,
accounting and reporting complexities associated with the account or disclosure, existence of related
party transactions in the account, and changes from the prior period in the account. This is a good
response, but is not the best response of the answer choices.
Choice "D" is incorrect. The auditor typically decides which controls to test based on the auditor's
understanding of the design and implementation of internal control rather than on analytical procedures
performed during the planning stage.
Page 29 of 41
29. CPA-08935
While testing a sample of an audit client's bank reconciliations during the year under audit, an auditor
notices that several immaterial deposits in transit did not clear the bank in a timely manner. The auditor
suspects that there may be fraud. Which of the following audit responses is most appropriate in this
situation?
A. Because the findings are not material, the auditor should project the errors to the population and
consider the materiality of the projected misstatement in the auditor's concluding procedures.
B. The auditor should consider the implications for the integrity of management or employees and the
possible effect on other aspects of the audit.
C. The auditor should focus on material misstatements and not consider these immaterial findings or
potential errors further.
D. The auditor should report the finding to the appropriate level of management immediately.

Page Reference: 9
ANSWER:
Choice "B" is correct. The auditor should consider the implications for the integrity of management or
employees and the possible effect on other aspects of the audit.
Choice "A" is incorrect. Even if fraud is immaterial in amount (quantitatively immaterial), it may be
qualitatively material and can have effects on other aspects of the audit.
Choice "C" is incorrect. The auditor should consider the effects of this suspected fraud, as it could have
implications on the integrity of management or employees and have possible effects on other aspects of
the audit.
Choice "D" is incorrect. The auditor should report the finding to the appropriate level of management on a
timely basis. (The communication does not have to occur immediately.)
Page 30 of 41
30. CPA-08938
Which of the following is a sampling risk that is associated with the efficiency of an audit?
A. Risk of assessing control risk too high.
B. Risk of incorrect acceptance.
C. Inherent risk.
D. Detection risk.

Representative Task: AIII-B1.1
Page Reference: 74
ANSWER:
Choice "A" is correct. The risk of assessing control risk too high is a sampling risk related to the efficiency
of an audit.
Choice "B" is incorrect. The risk of incorrect acceptance is a sampling risk related to the effectiveness of
an audit.
Choice "C" is incorrect. Inherent risk is not associated with the efficiency of an audit and is not a sampling
risk. Inherent risk is the susceptibility of a relevant assertion to a material misstatement, assuming that
there are no related controls.
Choice "D" is incorrect. Detection risk is not associated with the efficiency of an audit and is not a
sampling risk. Detection risk is the risk that the auditor will not detect a material misstatement that exists
in a relevant assertion.
Page 31 of 41
31. CPA-08939
Which of the following disclaimers of liability included within a response to an auditor's confirmation
request would allow the auditor to rely on the confirmation as appropriate audit evidence for an audit of a
nonissuer?
A. Information is obtained from electronic data sources, which might not contain certain information in
the respondent's possession.
B. Information in the confirmation may not be relied upon by the recipient.
C. Information is not guaranteed to be accurate or current and could be a matter of opinion.
D. Information is furnished as a matter of courtesy without a duty to do so and without responsibility,
liability, or warranty, expressed or implied.

Page Reference: 55
ANSWER:
Choice "D" is correct. Restrictions that appear to be boilerplate disclaimers of liability do not affect the
reliability of the information being confirmed. Examples of such disclaimers include the following:
 Information is furnished as a matter of courtesy without a duty to do so and without responsibility,
liability, or warranty, expressed or implied.
 The reply is given solely for the purpose of the audit without any responsibility on the part of the
respondent, its employees, or its agents, and it does not relieve the auditor from any other inquiry
or the performance of any other duty.
Choice "A" is incorrect. This statement casts doubt about the completeness of the information in the
confirmation and makes the confirmation less reliable. In this case, the auditor may consider it
appropriate to seek clarification from the respondent.
Choice "B" is incorrect. This statement casts doubt about the accuracy of the information in the
Choice "C" is incorrect. This statement casts doubt about the accuracy of the information in the
Page 32 of 41
32. CPA-08941
Which of the following statements in an attorney's legal letter requires further investigation?
A. "We believe that the plaintiff's case against the company is without merit."
B. "We are of the opinion that this action will not result in any liability to the company."
C. "It is our opinion that the company will be able to assert meritorious defenses to this action."
D. "It is our opinion that the possible liability to the company in this proceeding is nominal in amount."

Page Reference: 45
ANSWER:
Choice "C" is correct. The lawyer's comment that the company "will be able to assert meritorious
defenses to this action" is vague—it does not provide an evaluation of the likelihood of an unfavorable
outcome. The term "meritorious defenses" indicates that the entity's defenses will not be dismissed by the
court. However, it does not necessarily indicate that the entity will win the case. Therefore, the auditor
would likely want to request clarification that the situation has been properly accounted for and disclosed.
Choice "A" is incorrect. When a lawyer asserts that a contingent liability is remote ("without merit"), it is
unlikely that the auditor would require further clarification.
Choice "B" is incorrect. When a lawyer asserts that a contingent liability is remote ("will not result in any
liability"), it is unlikely that the auditor would require further clarification.
Choice "D" is incorrect. When a lawyer asserts that a contingent liability is remote ("proceeding is nominal
in amount"), it is unlikely that the auditor would require further clarification.
Page 33 of 41
33. CPA-08943
An auditor has set the materiality level for the financial statements as a whole at $125,000. Which of the
following misstatements would the auditor most likely consider material?
A. The client did not record $47,000 in trade accounts payable at year-end.
B. The client did not disclose $45,000 of related party transactions in the footnotes.
C. The client misclassified $42,000 of supplies expense as miscellaneous expense.
D. The client's estimate of the allowance for doubtful accounts is $40,000 more than the auditor's
estimate.

Representative Task: AIII-E1.2
Page Reference: 56
ANSWER:
Choice "B" is correct. The misstatement of failing to disclose $45,000 of related party transactions is
quantitatively immaterial because it is less than the overall materiality of $125,000. However, this
misstatement is likely to be considered qualitatively material. Related party transactions can occur at
terms that are significantly different from those for transactions that occur at arm's-length. Therefore, it is
important that users of the financial statements be provided with information about related party
transactions, even if the amount is less than materiality, as it helps represent the true picture of the
company.
Choice "A" is incorrect. This misstatement of failing to record $47,000 in trade accounts payable at year-
end is not quantitatively material nor qualitatively material.
Choice "C" is incorrect. A misclassification between certain account balances may be considered
qualitatively material. Although the supplies expense is part of operating expenses and miscellaneous
expense is part of nonoperating expenses, this choice is less likely to be considered qualitatively material.
Choice "D" is incorrect. The misstatement of $40,000 is quantitatively immaterial. If a misstatement
indicates management bias or a motivation by management (for example, an indication of a possible
pattern of bias by management when developing and accumulating accounting estimates), then it may be
considered a qualitatively material misstatement. This choice does not indicate a pattern of bias or bias in
making the estimate (management overstated rather than understated the allowance for doubtful
accounts), so it is less likely to be considered qualitatively material.
Page 34 of 41
34. CPA-08944
An auditor has determined a materiality threshold of $100,000 for a client. The auditor has accumulated
audit evidence that supports an allowance for bad debts in the range of $1.5 million to $1.8 million. The
client recorded $800,000 as the allowance for bad debts and declines to record any additional allowance.
What proposed adjustment will the auditor include in the summary of unadjusted differences?
A. Debit bad debt expense $1,100,000; credit allowance for bad debts $1,100,000.
B. Debit bad debt expense $700,000; credit allowance for bad debts $700,000.
C. Debit bad debt expense $850,000; credit allowance for bad debts $850,000.
D. Debit bad debt expense $750,000; credit allowance for bad debts $750,000.

Representative Task: AIII-E1.1
Page Reference: 55
ANSWER:
Choice "B" is correct. Because management's recorded estimate of $800,00 falls outside the auditor's
range of acceptable amounts of $1.5 million to $1.8 million, the difference between the recorded amount
of $800,000 and the amount at the closest end of the auditor's range, which is $1,500,000, would be
aggregated as a misstatement of $700,000 ($1,500,000 – $800,000 = $700,000).
Therefore, the summary of unadjusted difference should include a proposed adjustment of a debit to bad
debt expense and credit to allowance for bad debts for $700,000.
Note: If the auditor determined that a point estimate is a better estimate than any other amount, then the
auditor would use that amount to determine the reasonableness of the recorded amount.
Page 35 of 41
35. CPA-08945
If a service auditor is unable to obtain a written assertion from the service organization's management
regarding its system and the suitability of the design and operating effectiveness of controls, it would be
most appropriate for the auditor to:
A. Increase the substantive testing of the service organization's controls.
B. Withdraw from the engagement unless prohibited by law.
C. Assess a higher level of detection risk for the engagement.
D. Report management's action in the auditor's communication to those charged with governance.

Representative Task: AIII-F1.2
Page Reference: 37
ANSWER:
Choice "B" is correct. If a service auditor is unable to obtain a written assertion from the service
organization's management regarding its system and the suitability of the design and operating
effectiveness of controls, it would be most appropriate for the auditor to withdraw from the engagement
unless prohibited by law.
Choice "A" is incorrect. Increasing substantive testing of the service organization's controls is an
inappropriate response to not obtaining the written assertion from the service organization's management.
The service auditor report provides reasonable assurance on management's description and suitability of
the design (subject matter). If the subject matter the practitioner bases his or her opinion on is not
provided, then the auditor should withdraw from the engagement.
Choice "C" is incorrect. There is no alternative procedure to receiving the written assertion from the
service organization's management. Assessing a higher level of detection risk would not compensate for
the lack of written assertion.
Choice "D" is incorrect. Management is typically the responsible party of the service organization. If a
service auditor is unable to obtain a written assertion from the service organization's management
regarding its system and the suitability of the design and operating effectiveness of controls, the
Statement on Standards for Attestation Engagements requires that the practitioner withdrawal from the
engagement unless prohibited by law.
Page 36 of 41
36. CPA-08946
On February 17, Year 2, a company had a fire that destroyed a plant. The building and equipment had a
net carrying amount of $550,000 as of December 31, Year 1. The company anticipates that insurance
proceeds of $300,000 will be received. The audit of the financial statements dated December 31, Year 1,
was completed February 25, Year 2. How should the fire be reported in the financial statements for the
year ended December 31, Year 1?
A. The loss of $250,000 should be recorded as of December 31, Year 1, and disclosed in the notes to
the financial statements.
B. The value of the building and equipment should be adjusted to $250,000 as of December 31, Year
1, and the adjustment disclosed.
C. The December 31, Year 1, financial statements should disclose the effect of the fire with no
financial statement adjustment.
D. The December 31, Year 1, financial statements should be adjusted without disclosure.

Representative Task: AIII-G1.1
Page Reference: 77
ANSWER:
Choice "C" is correct. This is a Type 2 (nonrecognized) subsequent event because the event (fire that
destroyed a plant) did not exist at year-end but arose after year-end. Nonrecognized subsequent events
should be disclosed in the footnotes and should not include any adjustments to the financial statement
amounts.
Choice "A" is incorrect. The plant was undamaged as of December 31, Year 1, and, therefore, should be
recorded at the $550,000 on the balance sheet.
Choice "B" is incorrect. The value of the plant should not be adjusted for the Year 1 financial statements.
Choice "D" is incorrect. This is a material event that users of the financial statements would want to know
about. This event should be disclosed in the footnotes without any adjustments to the value of the plant.
Page 37 of 41
37. CPA-08948
If an auditor of a nonissuer concludes that reasonable justification exists to change an audit engagement
to an agreed-upon procedures engagement, then the report should:
A. Not include a reference to the original audit engagement but may include a reference to procedures
that have been performed.
B. Generally not include a reference to the original audit engagement but include an explanatory
paragraph discussing the change requested by management.
C. Refer to the original audit engagement only if requested by management and approved by those
charged with governance.
D. Refer to the original engagement only if the work performed to the date of the change was not
sufficient to complete the revised engagement.

Representative Task: AIV-B2.1
Page Reference: 40
ANSWER:
Choice "A" is correct. If an auditor of a nonissuer concludes that reasonable justification exists to change
an audit engagement to an agreed-upon procedures engagement, then the report should not include a
reference to the original audit engagement but may include a reference to procedures that have been
performed.
Note: Typically, when there is a change in engagement, the report should not reference procedures that
have been performed in the original audit engagement. However, there is an exception when the change
is from an audit engagement to an agreed-upon procedures engagement, because reference to the
procedures performed is a normal part of the agreed-upon procedures report.
Choice "B" is incorrect. The report should not include a paragraph discussing the change in engagement.
Choice "C" is incorrect. In order to avoid confusing the reader of the report, the report should not
reference the original audit engagement, even if it is requested by management and/or approved by those
charged with governance.
Choice "D" is incorrect. In order to avoid confusing the reader of the report, the report should not
reference the original audit engagement, even if the work performed to the date of the change was not
sufficient to complete the revised engagement.
Page 38 of 41
38. CPA-08949
Each of the following statements concerning compilation of financial statements on certain prescribed
forms is correct, except:
A. A prescribed form cannot depart from generally accepted accounting principles or fail to include all
required disclosures.
B. A prescribed form is any standard preprinted form designed by the body to which it will be
submitted.
C. The information required by a prescribed form is presumed to be sufficient to meet the needs of the
body that designed it.
D. A form designed by the entity whose financial statements are being compiled is not considered to
be a prescribed form.

Representative Task: AIV-C2.1
Page Reference: 22
ANSWER:
Choice "A" is correct. A prescribed form can depart from generally accepted accounting principles or fail
to include all required disclosures.
Choice "B" is incorrect. A prescribed form is any standard preprinted form designed by the body to which
it will be submitted.
Choice "C" is incorrect. The information required by a prescribed form is presumed to be sufficient to
meet the needs of the body that designed it.
Choice "D" is incorrect. A form designed by the entity whose financial statements are being compiled is
not considered to be a prescribed form.
Page 39 of 41
39. CPA-08950
Which of the following should the auditor of a nonissuer do when reporting on supplementary information
that is required by a designated accounting standard setter, presented with the basic financial
statements?
A. Include a paragraph before the opinion paragraph that references the required supplementary
information.
B. Include a paragraph after the opinion paragraph that references the required supplementary
information.
C. Include a reference to the required supplementary information in the opinion paragraph.
D. Make no reference to the required supplementary information in the report.

Page Reference: 89
ANSWER:
Choice "B" is correct. The audit report for nonissuers should include an other-matter paragraph when
reporting on required supplementary information that is presented with the basic financial statements.
This paragraph should appear after the opinion paragraph.
Choice "A" is incorrect. The other-matter paragraph that references the required supplementary
information should appear after (not before) the opinion paragraph.
Choice "C" is incorrect. The opinion paragraph is not modified to include reference to required
supplementary information. The reference to required supplementary information is included in an other-
matter paragraph.
Choice "D" is incorrect. Auditors of nonissuers should reference required supplementary information in
the audit report in an other-matter paragraph.
Page 40 of 41
40. CPA-08952
For financial statement audits performed in accordance with generally accepted government auditing
standards, auditors should report which of the following?
A. All violations of private grant agreements, regardless of materiality.
B. Suspected noncompliance with provisions of laws, regulations, contracts, or grant agreements.
C. Significant deficiencies in internal control.
D. Significant changes in the entity's internal control policies.

AICPA Released 2019
Question Title:
(Adapted)
Page Reference: 78
ANSWER:
Choice "C" is correct. For financial statement audits performed in accordance with generally accepted
government auditing standards, the auditor should report significant deficiencies in internal control.
Choice "A" is incorrect. An auditor should communicate material violations of private grant agreements.
Choice "B" is incorrect. Auditors should report identified or suspected noncompliance with provisions of
laws, regulations, contracts, or grant agreements that have a material effect on the financial statements.
Choice "D" is incorrect. An auditor is not required to communicate significant changes in the entity's
internal control policies.
Page 41 of 41

AICPA 2019 Auditing Newly Released MCQs—Medium Difficulty

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2019 AICPA Newly Released Questions—Auditing

2019 AICPA Auditing Newly Released MCQs—Medium (Moderate) Rating

Unit & Module to be Assigned To: A-5, M-3

Unit & Module to be Assigned To: A-6, M-8

Unit & Module to be Assigned To: A-3, M-3

Unit & Module to be Assigned To: A-3, M-1

Unit & Module to be Assigned To: A-1, M-12

Unit & Module to be Assigned To: A-2, M-7

Unit & Module to be Assigned To: A-5, M-5

Unit & Module to be Assigned To: A-3, M-1

Unit & Module to be Assigned To: A-5, M-7

Unit & Module to be Assigned To: A-3, M-9

Unit & Module to be Assigned To: A-4, M-1

Unit & Module to be Assigned To: A-3, M-5

Unit & Module to be Assigned To: A-4, M-7

Unit & Module to be Assigned To: A-4, M5

Unit & Module to be Assigned To: A-4, M-7

Unit & Module to be Assigned To: A-1, M-10

Unit & Module to be Assigned To: A-1, M-3

Unit & Module to be Assigned To: A-5, M-4

Unit & Module to be Assigned To: A-6, M-2

Unit & Module to be Assigned To: A-5, M-5

2019 AICPA Auditing Newly Released MCQs—Difficult (Hard) Rating

Unit & Module to be Assigned To: A-5, M-8

Unit & Module to be Assigned To: A-6, M-8

Unit & Module to be Assigned To: A-6, M-3

Unit & Module to be Assigned To: A-4, M-11

Unit & Module to be Assigned To: A-3, M-3

Unit & Module to be Assigned To: A-2, M-8

Unit & Module to be Assigned To: A-2, M-8

Unit & Module to be Assigned To: A-2, M-7

Unit & Module to be Assigned To: A-3, M-9

Unit & Module to be Assigned To: A-3, M-8

Unit & Module to be Assigned To: A-3, M-6

Unit & Module to be Assigned To: A-4, M-7

Unit & Module to be Assigned To: A-4, M-8

Unit & Module to be Assigned To: A-4, M-8

Unit & Module to be Assigned To: A-5, M-5

Unit & Module to be Assigned To: A-1, M-10

Unit & Module to be Assigned To: A-5, M-4

Unit & Module to be Assigned To: A-6, M-3

Unit & Module to be Assigned To: A-1, M-11

Unit & Module to be Assigned To: A-5, M-7

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