1.Whereclientischangingaudit
ors,PSArequi
rescommunicat
ionbet
ween
successorandpr edecessoraudi
tor.Thebur
denofini
ti
ati
ngthecommuni
cat
ion
rest
swi t
ht he
Ans.Successor
2.Whichoft
hefol
l
owingisanelementofaCPAfi
rm’squal
it
ycontr
olsy
stem t
hat
shoul
dbeconsi
der
edinestabl
ishi
ngit
squal
i
tycontr
olpol
ici
esandpr
ocedures?
Ans.Compl
yi
ngwi
thl
awsandr
egul
ati
ons
3.Thecodeofpr
ofessi
onal
ethi
cswoul
dmostl
i
kel
ybev
iol
atedi
fanaudi
tor
Ans.Ownsabui
l
dingandl
easesf
loorspacet
oanassur
ancecl
i
ent
4.ACPAf
ir
m namemayi
ncl
ude
Ans.Namesoft
hef
oll
owi
ngpar
tner
5.Absenceofreasonabl
ecarethatcanbeexpect
edofaper
soni
nasetof
ci
rcumstancesisthedef
ini
ti
onof
Ans.Or
dinar
ynegl
i
gence
6.Whichoft
hefoll
owinganal
yti
cal
rev
iewpr
ocedur
es,
shoul
dbeappl
i
edt
othe
i
ncomestatement?
Ans.Comparetheactualrev
enuesandexpenseswithcorrespondi
ngf
igur
esof
theprev
iousyearandinv
estigat
esi
gni
fi
cantdiff
erences.
7.Whi
choft
hef
oll
owi
ngi
snotr
epr
esent
edi
ntheAASC?
Ans.BI
R
8.Auditorssomet i
mesusecompar i
sonofr
ati
osasaudi
tevi
dence.Forexampl
e,an
unexplaineddecreaseinther
ati
onofgr
ossprof
itt
osal
esmaysuggestwhichof
thefoll
owi ngpossibi
l
iti
es?
Ans.Unr
ecor
dedsal
es
, 9.Theaudi t
orsareplanninganaudi tengagementforanewcl ienti
nabusiness
thatisunfamil
iartotheauditors.Whichofthefol
lowingwoul dbethemost
usefulsourceoftheinformationf ort
heaudit
orduri
ngt hepreli
minar
yplanni
ng
stagewhent heyaretryingtoobt ainagener
alunderstandi
ngofauditpr
oblems
thatmightbeencount ered?
Ans.Pr
iory
earwor
kingpaper
soft
hepr
edecessoraudi
tor
10.
Whi
chifthef
oll
owi
ngi
snotav
ali
dgr
oundf
orsuspensi
onorr
emov
alof
membersoft
heBOA?
Ans.Negl
ectofdut
yori
ncompet
ence
11.
Anauditori
naccept
inganauditengagementwher
eindoesnotpossesst
he
indust
ryexper
ti
seofthebusi
nessentit
ywould
Ans.Obt
ainaknowl
edgeofmat
ter
sthatr
elat
etot
henat
ureoft
heent
it
y’s
business
12.
Theaudi
tordi
scussedt
othecl
i
entt
heaudi
tfi
ndi
ngs_
___
__t
other
eval
uat
ionof
PPEamountedto…..
Ans.Wi
thr
egar
ds
13.
Thepredecessoraudi
tori
srequi
redtorespondtot
herequestofthesuccessor
audit
orforthei
nformati
on,butt
heresponsecanbeli
mitedtostat
ingthatno
inf
ormationwil
lbeprovi
dedwhen
Ans.Ther
ear
elegal
probl
emsbet
weencl
i
entandpr
edecessor
14.
Theboar
d,subjectt
ot heapproval
oft
hecommi
ssi
on,
mayr
evi
seorexcl
udeany
oft
hesubject
sandt heirsy
ll
abi…
Ans.Thr
eey
ear
s
15.
Inher
entri
skandcont
rol
riskdi
ff
erf
rom det
ect
ionr
iski
nthati
nher
entr
iskand
contr
olri
sk
Ans.Funct
ionsoft
hecl
i
entandi
tsenv
ironmentwhi
l
edet
ect
ionr
iski
snot
ors,PSArequi
rescommunicat
ionbet
ween
successorandpr edecessoraudi
tor.Thebur
denofini
ti
ati
ngthecommuni
cat
ion
rest
swi t
ht he
Ans.Successor
2.Whichoft
hefol
l
owingisanelementofaCPAfi
rm’squal
it
ycontr
olsy
stem t
hat
shoul
dbeconsi
der
edinestabl
ishi
ngit
squal
i
tycontr
olpol
ici
esandpr
ocedures?
Ans.Compl
yi
ngwi
thl
awsandr
egul
ati
ons
3.Thecodeofpr
ofessi
onal
ethi
cswoul
dmostl
i
kel
ybev
iol
atedi
fanaudi
tor
Ans.Ownsabui
l
dingandl
easesf
loorspacet
oanassur
ancecl
i
ent
4.ACPAf
ir
m namemayi
ncl
ude
Ans.Namesoft
hef
oll
owi
ngpar
tner
5.Absenceofreasonabl
ecarethatcanbeexpect
edofaper
soni
nasetof
ci
rcumstancesisthedef
ini
ti
onof
Ans.Or
dinar
ynegl
i
gence
6.Whichoft
hefoll
owinganal
yti
cal
rev
iewpr
ocedur
es,
shoul
dbeappl
i
edt
othe
i
ncomestatement?
Ans.Comparetheactualrev
enuesandexpenseswithcorrespondi
ngf
igur
esof
theprev
iousyearandinv
estigat
esi
gni
fi
cantdiff
erences.
7.Whi
choft
hef
oll
owi
ngi
snotr
epr
esent
edi
ntheAASC?
Ans.BI
R
8.Auditorssomet i
mesusecompar i
sonofr
ati
osasaudi
tevi
dence.Forexampl
e,an
unexplaineddecreaseinther
ati
onofgr
ossprof
itt
osal
esmaysuggestwhichof
thefoll
owi ngpossibi
l
iti
es?
Ans.Unr
ecor
dedsal
es
, 9.Theaudi t
orsareplanninganaudi tengagementforanewcl ienti
nabusiness
thatisunfamil
iartotheauditors.Whichofthefol
lowingwoul dbethemost
usefulsourceoftheinformationf ort
heaudit
orduri
ngt hepreli
minar
yplanni
ng
stagewhent heyaretryingtoobt ainagener
alunderstandi
ngofauditpr
oblems
thatmightbeencount ered?
Ans.Pr
iory
earwor
kingpaper
soft
hepr
edecessoraudi
tor
10.
Whi
chifthef
oll
owi
ngi
snotav
ali
dgr
oundf
orsuspensi
onorr
emov
alof
membersoft
heBOA?
Ans.Negl
ectofdut
yori
ncompet
ence
11.
Anauditori
naccept
inganauditengagementwher
eindoesnotpossesst
he
indust
ryexper
ti
seofthebusi
nessentit
ywould
Ans.Obt
ainaknowl
edgeofmat
ter
sthatr
elat
etot
henat
ureoft
heent
it
y’s
business
12.
Theaudi
tordi
scussedt
othecl
i
entt
heaudi
tfi
ndi
ngs_
___
__t
other
eval
uat
ionof
PPEamountedto…..
Ans.Wi
thr
egar
ds
13.
Thepredecessoraudi
tori
srequi
redtorespondtot
herequestofthesuccessor
audit
orforthei
nformati
on,butt
heresponsecanbeli
mitedtostat
ingthatno
inf
ormationwil
lbeprovi
dedwhen
Ans.Ther
ear
elegal
probl
emsbet
weencl
i
entandpr
edecessor
14.
Theboar
d,subjectt
ot heapproval
oft
hecommi
ssi
on,
mayr
evi
seorexcl
udeany
oft
hesubject
sandt heirsy
ll
abi…
Ans.Thr
eey
ear
s
15.
Inher
entri
skandcont
rol
riskdi
ff
erf
rom det
ect
ionr
iski
nthati
nher
entr
iskand
contr
olri
sk
Ans.Funct
ionsoft
hecl
i
entandi
tsenv
ironmentwhi
l
edet
ect
ionr
iski
snot
