AUD CPA EXAMINATION TEST 2026
QUESTIONS AND 100% CORRECT
ANSWERS GRADED A+
◉ As the acceptable level of detection risk decreases, an auditor may :
A. Reduce substantive testing by relying on the assessments of inherent
risk and control risk.
B. Postpone the planned timing of substantive tests from interim dates to
the year-end.
C. Eliminate the assessed level of inherent risk from consideration as
planning factor.
D. Lower the assessed level of control risk from the maximum level to
below the maximum. .Answer: Correct:(B)t. As the acceptable level of
detection risk decreases, the assurance provided from substantive tests
should increase. Consequently, the auditor should do one or more of the
following :
1) change the nature of substantive tests from a less effective to a more
effective procedure,
2) change the timing of the substantive tests, such as performing them at
year-end rather than at an interim date, or
3) change the extent of substantive tests, such as using a larger sample
size.
,◉ The risk that an auditor will conclude, based on substantive tests, that
a material misstatement does not exist in an account balance when, in
fact, such misstatement does exist is referred to as
A. Sampling risk
B. Detection risk
C. Nonsampling risk
D. Inherent risk .Answer: Correct:(B)because detection risk is the risk
that exists in an assertion. Detection risk may be viewed in terms of two
components:
(1) the risk that analytical procedures and other relevant substantive tests
would fail to detect misstatements equal to tolerable misstatement
(2) the allowable risk of incorrect acceptance for the substantive tests of
details
◉ Which of the following would an auditor most likely use in
determining the auditor's preliminary judgement about materiality?
A. The results of the initial assessment of control risk.
B. The anticipated sample size for planned substantive tests.
C. The entity's financial statements of the prior year.
D. The assertions that embodies in the financial statements. .Answer:
Correct:(C)because auditors often choose to use a measure relating to
the prior year's financial statements. to arrive at a preliminary judgement
about materiality.
, B is wrong because while an auditor's materiality judgement will affect
the anticipated sample size for planned substantive tests, sample size
dose not affect the materiality judgement.
◉ Holding other planning consideration equal, a decrease in the amount
of misstatement in a class of transaction that an auditor could tolerate
most likely would cause the auditor to
A. Apply the planned substantive tests prior to the balance sheet date
B. Perform the planned auditing procedures closer to the balance sheet
date.
C. Increase the assessed level of control risk for relevant financial
statement assertion.
D. Decrease the extent of auditing procedures to be applied to the class
of transaction. .Answer: Correct:(B)audit standards state that decreasing
the tolerable amount of misstatement will require the auditor to do:
(1)Nature: Select a more effective auditing procesure
(2)Extent: increase the extent of a particular auditing procedure
(3) Timing:perform auditing procedures closer to the balance sheet date.
◉ An attitude that includes a questioning mind and a critical assessment
of audit evidence is referred to as
A. Due professional care
B. Professional skepticism
C. Reasonable assurance
QUESTIONS AND 100% CORRECT
ANSWERS GRADED A+
◉ As the acceptable level of detection risk decreases, an auditor may :
A. Reduce substantive testing by relying on the assessments of inherent
risk and control risk.
B. Postpone the planned timing of substantive tests from interim dates to
the year-end.
C. Eliminate the assessed level of inherent risk from consideration as
planning factor.
D. Lower the assessed level of control risk from the maximum level to
below the maximum. .Answer: Correct:(B)t. As the acceptable level of
detection risk decreases, the assurance provided from substantive tests
should increase. Consequently, the auditor should do one or more of the
following :
1) change the nature of substantive tests from a less effective to a more
effective procedure,
2) change the timing of the substantive tests, such as performing them at
year-end rather than at an interim date, or
3) change the extent of substantive tests, such as using a larger sample
size.
,◉ The risk that an auditor will conclude, based on substantive tests, that
a material misstatement does not exist in an account balance when, in
fact, such misstatement does exist is referred to as
A. Sampling risk
B. Detection risk
C. Nonsampling risk
D. Inherent risk .Answer: Correct:(B)because detection risk is the risk
that exists in an assertion. Detection risk may be viewed in terms of two
components:
(1) the risk that analytical procedures and other relevant substantive tests
would fail to detect misstatements equal to tolerable misstatement
(2) the allowable risk of incorrect acceptance for the substantive tests of
details
◉ Which of the following would an auditor most likely use in
determining the auditor's preliminary judgement about materiality?
A. The results of the initial assessment of control risk.
B. The anticipated sample size for planned substantive tests.
C. The entity's financial statements of the prior year.
D. The assertions that embodies in the financial statements. .Answer:
Correct:(C)because auditors often choose to use a measure relating to
the prior year's financial statements. to arrive at a preliminary judgement
about materiality.
, B is wrong because while an auditor's materiality judgement will affect
the anticipated sample size for planned substantive tests, sample size
dose not affect the materiality judgement.
◉ Holding other planning consideration equal, a decrease in the amount
of misstatement in a class of transaction that an auditor could tolerate
most likely would cause the auditor to
A. Apply the planned substantive tests prior to the balance sheet date
B. Perform the planned auditing procedures closer to the balance sheet
date.
C. Increase the assessed level of control risk for relevant financial
statement assertion.
D. Decrease the extent of auditing procedures to be applied to the class
of transaction. .Answer: Correct:(B)audit standards state that decreasing
the tolerable amount of misstatement will require the auditor to do:
(1)Nature: Select a more effective auditing procesure
(2)Extent: increase the extent of a particular auditing procedure
(3) Timing:perform auditing procedures closer to the balance sheet date.
◉ An attitude that includes a questioning mind and a critical assessment
of audit evidence is referred to as
A. Due professional care
B. Professional skepticism
C. Reasonable assurance
