Free AUD CPA Practice Question Walkthroughs

On this page you’ll find free AUD CPA practice question walkthroughs on topics from the AICPA CPA exam blueprints for the AUD exam.

AUD I: Ethics, Professional Responsibilities, and General Principles

A1

Application: Apply the Conceptual Framework for Members in Public Practice and Members in Business included in the AICPA Code of Professional Conduct to situations that could present threats to compliance with the rules included in the Code.

Application: Apply the Conceptual Framework for Independence included in the AICPA Code of Professional Conduct to situations that could present threats to compliance with the rules included in the Code.

A2

Application: Apply the ethical requirements and independence rules of the Securities and Exchange Commission and the Public Company Accounting Oversight Board to situations that could compromise compliance or impair independence during an audit of an issuer.

A3

Application: Apply the ethical requirements and independence rules of the Government Accountability Office Government Auditing Standards to situations that could present threats to compliance during an audit of, or attestation engagement for, a government entity or an entity receiving federal awards.

B

Remembering and Understanding: Understand unconscious auditor biases and other impediments to acting with professional skepticism, including threats, incentives and judgment making shortcuts.

C1

Remembering and Understanding: Identify the nature, scope and objectives of the different types of audit
engagements for issuers and nonissuers.

C2

Remembering and Understanding: Identify the nature, scope and objectives of engagements performed in
accordance with Government Accountability Office Government Auditing Standards, including single audits.

D1

Remembering and Understanding: Identify the preconditions needed for accepting or continuing an engagement.

D2

Remembering and Understanding: Identify the factors affecting the acceptance or continuance of an engagement, including communication with predecessor auditors.

Application: Document the terms of an engagement in a written engagement letter or other suitable form of written agreement.

E

Remembering and Understanding: Identify the elements that comprise sufficient appropriate documentation in physical or electronic form for an engagement.

Remembering and Understanding: Identify the requirements for the assembly and retention of documentation in physical or electronic form for an engagement.

F1

Remembering and Understanding: Identify the matters related to the planned scope and timing of an engagement that should be communicated to management and those charged with governance.

G

Remembering and Understanding: Identify a CPA firm’s responsibilities for its accounting and auditing practice’s engagement quality.

AUD II: Assessing Risk and Developing a Planned Response

A1

Remembering and Understanding: Explain the purpose and significance of the overall engagement strategy for an engagement.

A2

Application: Prepare a draft engagement plan for specific processes, accounts or classes of transactions considering the prior period and changes in the current period.

B1

Remembering and Understanding: Understand supply and demand, elasticity measures and profit maximization (e.g. marginal cost, marginal revenue).

Remembering and Understanding: Understand the business cycles (trough, expansion, peak, recession) and leading, coincident and lagging indicators of economic activity (e.g., consumer price index, producer price index, federal funds rate, bond yields, unemployment).

• Business Cycles
• Indicators of Economic Activity (Leading, Lagging, Coincident)

C1

Remembering and Understanding: Define internal control within the context of the COSO internal control framework, including the purpose, objectives and limitations of the framework.

Remembering and Understanding: Identify and define the components, principles and underlying structure of the COSO internal control framework.

C2

Remembering and Understanding: Understand the elements of an entity’s control environment, including the design and implementation of IT general controls and entity-level controls.

C3

Application: Identify and document the significant business processes and data flows that directly or indirectly impact an entity’s financial statements.

Application: Perform a walkthrough of a significant business process and document (e.g., flow charts, process diagrams, narratives) the flow of relevant transactions and data from initiation through financial statement reporting and disclosure.

Application: Perform tests of the design and implementation of relevant automated and manual transaction-level internal controls (e.g. authorizations and approvals, reconciliations, verifications, physical or logical controls, segregation of duties).

C4

Remembering and Understanding: Understand the differences between SOC 1® and SOC 2® engagements.

Application: Identify and document the purpose and significance of an entity’s use of a service organization, including the impact of using a SOC 1® Type 2 report in an audit of an entity’s financial statements.

D1

Remembering and Understanding: Understand materiality, including qualitative considerations, as it relates to the financial statements and related disclosures as a whole.

Application: Calculate materiality for an entity’s financial statements as a whole.

D2

Application: Determine risk of material misstatement, whether due to fraud or error, at the financial statement level and relevant assertion level for each significant class of transactions, significant account and disclosure.

E

Application: Determine the pressures, incentives and opportunities for fraud (e.g., fraudulent financial reporting, misappropriation of assets) that could lead to the risk of material misstatement.

Application: Determine risk of material misstatement, whether due to fraud or error, at the financial statement level and relevant assertion level for each significant class of transactions, significant account and disclosure.

Application: Determine a response to risks of material misstatement at the financial statement level (e.g. maintaining professional skepticism, engagement team supervision, incorporating elements of unpredictability), considering the auditor’s understanding of the control environment.

Application: Determine appropriate procedures to assess the operating effectiveness of relevant controls.

Application: Determine appropriate substantive procedures to test relevant assertions for each significant class of transactions, significant account and disclosure.

F

Remembering and Understanding: Identify the factors to consider in determining the extent to which an engagement team can use the work of the internal audit function, IT auditor, auditor’s specialist, management’s specialist, component auditor or a referred-to auditor.

G1

Remembering and Understanding: Understand the accountant’s responsibilities with respect to laws and regulations that have a direct effect on the determination of material amounts or disclosures in an entity’s financial statements for an engagement.

G2

Remembering and Understanding: Recognize the potential impact of lower complexity and higher complexity significant accounting estimates on the risk of material misstatement, including the indicators of management bias.

G3

Application: Perform procedures to identify related party relationships and transactions, including consideration of significant unusual transactions and transactions with executive officers.

G4

Remembering and Understanding: Understand when an entity is required to have a single audit in accordance with the audit requirements of the Uniform Guidance, including the identification of federal awards and major programs.

AUD III: Performing Further Procedures and Obtaining Evidence

A1

Remembering and Understanding: Explain the components of a relational database (e.g., tables, records, fields/attributes, primary and foreign keys, normalization).

A2

Application: Perform procedures (e.g., agreeing information to original sources, validating search or query criteria used to obtain data) to validate the reliability (completeness, accuracy, authenticity and susceptibility to management bias) of data and information obtained from internal and external sources (e.g., analyses, schedules, reconciliations prepared using various technologies including artificial intelligence).

A3

Analysis: Perform procedures using outputs (e.g. reports, visualizations) from audit data analytic techniques to determine relationships, trends or notable items in the data and identify the appropriate audit response.

B

Application: Determine the sources of sufficient appropriate evidence (e.g., obtained from management’s specialists, obtained from external sources, developed by the audit team from internal or external sources).

Analysis: Exercise professional skepticism and professional judgment while analyzing information to be used as audit evidence taking into account its relevance and reliability, authenticity and whether such information corroborates or contradicts the assertions in the financial statements.

C

Application: Determine the appropriate sampling method to be used in order to accomplish the objective (control, attribute, test of detail) of the planned procedures.

D1

Application: Use observation and inspection to obtain evidence.

D2

Application: Determine the suitability of substantive analytical procedures to provide evidence to support an identified assertion.

D3

Application: Confirm significant account balances and transactions using appropriate tools and techniques (e.g., confirmation services, electronic confirmations, manual confirmations) to obtain relevant and reliable evidence.

E1

Application: Recalculate and reperform procedures to validate the inputs and assumptions of an entity’s significant accounting estimates with a higher risk of material misstatement or complexity, such as fair value estimates.

E2

Remembering and Understanding: Identify the considerations relating to the measurement and disclosure of the fair value of investments in securities in an audit.

E3

Evaluation: Test the ending inventory quantities in an audit by obtaining evidence regarding the existence and condition of inventory and inventory held by others (e.g., inventory counting procedures, confirmation) and conclude whether inventory records accurately reflect count results.

E4

Application: Perform appropriate audit procedures, including inquiring of management and others, reviewing minutes and sending external confirmations, to detect the existence of litigation, claims and assessments.

E5

Remembering and Understanding: Identify factors that should be considered while performing planned procedures that may indicate substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time.