CPA AA Audit & Insurance Online Training
CPA AA Online Training
The questions for AA were last updated at Apr 21,2025.
- Exam Code: AA
- Exam Name: Audit & Insurance
- Certification Provider: CPA
- Latest update: Apr 21,2025
Jones & Co is the external auditor of Blue plc, a listed company. The directors of Blue plc have requested that Jones & Co carry out a review engagement assessing the effectiveness of its corporate governance policies against the UK Corporate Governance Code.
For the above review engagement, select which part of the engagement description constitutes the subject matter?
- A . Blue plc’s corporate governance policies
- B . The UK Corporate Governance Code
- C . Jones & Co
- D . The directors of Blue plc
Grey Ltd has recently discovered that it has been paying invoices in respect of goods which had been returned as faulty prior to acceptance. It is company policy to record goods only if they have been accepted.
Which of the following controls would be useful in preventing such incidence in future?
- A . Matching of purchase invoices with goods received notes
- B . Matching of purchase invoices with orders
- C . Comparison of supplier statements with payables ledger accounts
- D . Date stamping purchase invoices on receipt
Internal auditors must exercise due care if they are to meet their responsibilities for fraud detection. Thus, the existence of certain conditions should raise auditor’s professional scepticism concerning possible fraud .
Which of the following is most likely to be considered as an indication of possible fraud?
- A . A new management team installed as the result of a takeover.
- B . Rapid turnover of financial executives.
- C . Rapid expansion into new markets.
- D . Tax authorities’ audit of tax returns.
Rostar Ltd develops games for X-box and PCs. The unique gaming experience made the company outstandingly popular among the local customers and its last game release outperform its expectation. This popularity leads to sudden growth in revenues that quadrupled during the last period. As a result, Rostar Ltd is now obliged to have a statutory audit for the first time.
Which of the following is not a benefit that Rostar Ltd may obtain from the statutory audit?
- A . Assurance of compliance with Companies Act
- B . Recommendations on systems via management letter
- C . Increased accountability of the IT department
- D . Independent confirmation of profits earned/net assets
Dan Lawrence is the auditor of Nava Ltd. The directors are Bernard Russell, Pauli Morin and Cyndi Clifford. They are also the only shareholders owning 35% of total shares by Russell and Morin and the rest by Cyndi. Recent dispute between Russell and Morin arises that Dan believesmay be impossible to resolve. However, Morin requested Dan to provide her with details of all last year purchases through company’s accounts by Russell and Cyndi. Dan Lawrence has all the company’s books and records in his office.
What would be the most appropriate action by Dan Lawrence when Pauli Morin asked him to disclose company’s accounts details?
- A . Provide with all the relevant information as was requested by Pauli Morin because she has the controlling interest in the company.
- B . Decline the request of Pauli Morin even if she has the controlling interest in the
company. - C . Provide the relevant information before taking the consent from other directors.
- D . Arrange dispute resolution meeting and find a way to resolve the dispute between Russell and Morin.
Audit documentation provides evidence that the audit complies with the ISAs. However, it is neither necessary nor practicable for the auditor to document every matter considered, or professional judgment made, in an audit. Further, it is unnecessary for the auditor to document separately (as in a checklist, for example) compliance with matters for which compliance is demonstrated by documents included within the audit file. For example the existence of an adequately documented audit plan demonstrates that the auditor has planned the audit.
Which one of the following is not an objective of audit planning?
- A . To determine the scope of the engagement
- B . To ensure appropriate attention is devoted to the important areas of the audit
- C . To identify potential problems and resolve them on a timely basis
- D . To assign work to members of the audit team
When you audit a company, your main goal is to provide assurance to the users of the company’s financial statements that those documents are free of material misstatement. You use the audit risk model, which consists of inherent, control, and detection risk on your client’s financial statements.
‘Audit risk’ here does refer to________________.
- A . process of auditing
- B . loss from litigation
- C . adverse publicity
- D . events arising in connection with the audit of financial statements
The auditor of Net plc carried out an external confirmation of receivables at the year end to confirm the accuracy of total trade receivables in the balance sheet at that date. Two of the replies to the confirmations disagreed the balance.
For each of these two disagreements, select whether the disagreement would be considered as a misstatement or would not be considered as a misstatement for the purposes of evaluating the accuracy of total trade receivables in the balance sheet at the year end.
(i)Word Ltd disagreed the balance because they had made a payment two days before the year end. The auditor has confirmed that the cheque cleared the bank two days after the year end.
(ii)Red Ltd disagreed the balance because their records did not contain invoice number SI 00942. This invoice and associated goods were despatched by Net plc on the last day of the year. The auditor has verified that the despatch note and cut-off with inventory are correct.
- A . Both (i) and (ii) would be considered as misstatement
- B . (i) would be considered as misstatement and (ii) would not be considered as misstatement
- C . (i) would not be considered as misstatement and (ii) would be considered as misstatement
- D . Both (i) and (ii) would not be considered as misstatement
David Copper is performing the audit of financial statement of Igma Co and is in doubt about some of the transactions.
If David believes an illegal act may have occurred, which of the following will be the LEAST necessary action?
- A . Inquire of management of Igma Co, at a level above those likely to be involved with the illegality.
- B . Consult with Igma Co’s legal counsel.
- C . Consider accumulating additional evidence to determine if there is actually an illegal act.
- D . File a case against the client as soon as possible.
When performing risk assessment procedures and related activities to obtain an understanding of the entity and its environment, including the entity’s internal control, required by ISA 315, the auditor shall perform certain procedures to obtain information for use in identifying the risks of material misstatement due to fraud.
Which of the following is not a part of an entity’s risk assessment process?
- A . Identify relevant business risks
- B . Assess the likelihood of occurrence
- C . Decide upon actions to manage the risks
- D . Report the process to the auditors
Latest AA Dumps Valid Version with 80 Q&As
Latest And Valid Q&A | Instant Download | Once Fail, Full Refund
