Free AICPA CPA-Auditing Exam Dumps

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Question No: 1

MultipleChoice

An annual shareholders' report includes audited financial statements and contains supplementary information required by GAAP. Is it permissible for the auditor to report on such information?

Options

ANo, because such reporting may lead to the belief that the auditor is responsible for the information.

BNo, because the auditor has no responsibility to read the other information in a document containing audited financial statements.

CYes, provided the report provides negative assurance only.

DYes, provided the auditor performs sufficient audit procedures to determine whether the information is fairly stated, in all material respects, in relation to the financial statements.

Question No: 2

MultipleChoice

Which of the following is true about the term "likely misstatement?"

Options

AIt refers to misstatements that have not been specifically identified, but which are likely to exist based on the auditor's judgment.

BIt refers to the cumulative effect of misstatements from prior years on the current year's financial statements.

CIt refers to misstatements that have been specifically identified by the auditor.

DIt includes both identified misstatements and an estimate of unidentified misstatements.
Explanation
Choice 'a' is correct. A 'likely misstatement' is one that has not been specifically identified, but which is likely to exist based on the auditor's judgment.
Choice 'b' is incorrect. 'Likely misstatement' does not refer to the cumulative effect of prior year errors.
It is a measure of misstatements the auditor considers likely to exist, that have not been specifically identified.
Choice 'c' is incorrect. 'Likely misstatement' is a measure of misstatements the auditor considers likely to exist, that have not been specifically identified.
Choice 'd' is incorrect. The term 'likely misstatement' includes only an estimate of potential errors. It does not include specific misstatements identified during the audit.

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