Sample AUD Questions
There are a handful of new topics appearing in the AUD multiple questions for based on some small changes in the 2015 and 2016 study material. We’ve compiled a handful of
Sample AUD Questions #1: Gifts Basis
- To determine if a gift or entertainment was reasonable in the circumstances, what does the CPA not have to consider?
A. The cost or value of the gift
B. The value of other gifts accepted
C. The occasion giving rise to the gift
D. Whether similar gifts have been rejected in the past
The correct answer is D.
To determine “reasonable in the circumstances,” one must consider:
• The nature of the gift or entertainment
• The occasion giving rise to the gift or entertainment
• The cost or value of the gift or entertainment
• The nature, frequency, and value of other gifts and entertainment offered or accepted
• Whether the entertainment was associated with the active conduct of business either directly before, during, or after the entertainment
• Whether other clients, customers, or vendors also participated in the entertainment
• The individuals from the client, customer, or vendor and the member’s firm or employer who participated in the entertainment
2. May a member make a political contribution to the campaign of an individual that is associated with the CEO of an attest client?
A. Yes if the association is non-arms length.
B. Yes if the political contribution is not made with the intention of influencing the procurement of professional services or in contravention of federal or state laws or regulations.
C. No if the member holds a material financial interest.
D. No if the member can exercise significant influence over the attest client.
The correct answer is B.
A member would not impair independence or be in violation of any other rule of conduct provided the political contribution is not made with the intention of influencing the procurement of professional services or in contravention of federal or state laws or regulations.
You can review more information about the Gift Basis with the AICPA document.
Sample AUD Questions #3: Independence
B. Morden has a car loan with Auto Credit International.
C. Morden was a shareholder Auto Credit International stock six years ago.
D. Morden and a Auto Credit International Bank board member serve on the board of the same golf club.This answer is correct because serving as an officer, director, or employee of the bank impairs the auditor’s independence.
5. Which of the following is not a “covered member” under the Independence Rule of the Code of Professional Conduct?
A. A partner that provides fifteen hours of tax services to the client.
B. A partner that provides five hours of tax services to the client.
C. A manager that provides fifteen hours of tax services to the client.
D. A manager that provides twenty hours of tax services to the client.
The correct answer is B.
Partners or managers must provide ten or more hours of nonattest services before they are considered to be covered members.
Sample AUD Questions : SSARS
6. A CPA is reporting on comparative financial statements of a non-issuer. The CPA audited the prior year’s financial statements and reviewed those of the current year in accordance with Statements on Standards for Accounting and Review Services (SSARS). The CPA has added a separate paragraph to the review report to describe the responsibility assumed for the prior year’s audited financial statements.
This separate paragraph should indicate:
A. That the audit report should no longer be relied on.
B. That the CPA did not update the assessment of control risk.
C. The reasons for the change from an audit to a review.
D. The type of opinion expressed previously.
The correct answer is D.
A separate paragraph to the report should indicate:
(1) that the financial statements of the prior period were audited,
(2) the date of the previous report,
(3) the type of opinion expressed,
(4) if the opinion was other than unmodified , the substantive reasons therefor and
(5) that no auditing procedures were performed after the date of the previous report.
7. An accountant is required to comply with the provisions of the Statements on Standards for Accounting and Review Services (SSARS) when performing which of the following tasks?
A. Preparing financial statements of a nonissuer.
B. Providing the client with software to generate financial statements.
C. Providing the client with bookkeeping software.
D. Providing the client with Sarbanes Oxley compliance software.
The correct answer is “A”. SSARS apply to preparation of financial statements.
Sample AUD Questions #8: Financial Interests
A member is trying to determine if he has a direct or material indirect financial interest in an attest client. The attest client is a mutual fund company. Which of the following is evidence of a material or immaterial i
A. The member owns shares of one fund offered by the mutual fund.
B. The member owns .25% of the shares of the mutual fund company.
C. The member owns 4% of the shares of one fund offered by the mutual fund.
D. The member’s wife owns 2.5% of one fund and the member owns 2% of another fund offered by the mutual fund company.
The correct answer is B
Ownership of shares in the mutual fund company result in a direct financial interest in the mutual fund.
Ownership in funds offered by the mutual fund may be direct or indirect depending on the percentage owned. 5% or less owned of a particular fund is considered an immaterial indirect financial interest. However, if the member owns more than 5% of a fund would have to be further scrutinized to determine if the member holds a material indirect interest.
If you are looking for more practice AUD questions for the CPA exam, you can find 500 sample Auditing questions that we have compiled over the years.