CPA AUD AUDITING AND
ATTESTATION PRACTICE
EXAM 2026 85 QUESTIONS
COMPLETE
Question 1: When inventory is material, the auditor's attendance at the physical
inventory count primarily allows the auditor to:
Choices:
1) Take responsibility for the client's inventory records 2) Replace all pricing and cuto� procedures 3) Observe management's count procedures, inspect inventory, and perform test counts 4) Guarantee that all inventory is saleable Correct Answer: Observe management's count procedures, inspect inventory, and perform test counts Explanation: Attendance at the count provides evidence through observation, inspection, and test counts. Management remains responsible for the count and records, and the auditor still performs other procedures for valuation and cuto�.Page 1
Question 2: Which control is most directly designed to reduce the risk that
unauthorized changes are made to a production accounting application?
Choices:
1) A formal program-change process requiring testing, approval, and controlled migration to production 2) A physical inventory count 3) A customer credit-limit review 4) A monthly bank reconciliation Correct Answer: A formal program-change process requiring testing, approval, and controlled migration to production Explanation: Change-management controls are IT general controls that help ensure program changes are authorized, tested, approved, and properly moved into production.Question 3: Which statement best describes the objective of an engagement quality review under a �rm's system of quality management?
Choices:
1) To provide an objective evaluation of signi�cant judgments and conclusions before the engagement report is released when such a review is required 2) To transfer responsibility for the audit opinion from the engagement partner to the reviewer 3) To replace supervision and review by the engagement team 4) To perform a second complete audit of all account balances Correct Answer: To provide an objective evaluation of signi�cant judgments and conclusions before the engagement report is released when such a review is required Explanation: An engagement quality review is an objective evaluation of signi�cant judgments made by the engagement team and the conclusions reached. It does not transfer responsibility from the engagement partner or replace normal engagement supervision and review.Page 2
Question 4: Which procedure is speci�cally responsive to the risk of management override of controls?
Choices:
1) Comparing the current audit fee with the prior-year fee 2) Observing only the physical inventory count 3) Con�rming only accounts receivable 4) Testing the appropriateness of journal entries and other adjustments Correct Answer: Testing the appropriateness of journal entries and other adjustments Explanation: Auditors respond to management override risk by testing journal entries and other adjustments, reviewing accounting estimates for bias, and evaluating the business rationale for signi�cant unusual transactions.Question 5: During planning, an auditor notes that gross margin fell from 38% to 24% while sales volume and product mix were stable. What is the best initial audit response?
Choices:
1) Ignore the change because analytical procedures are not used in planning 2) Investigate the unexpected relationship and consider whether it indicates a risk of material misstatement 3) Immediately issue a quali�ed opinion 4) Reduce substantive testing because the lower margin is conservative Correct Answer: Investigate the unexpected relationship and consider whether it indicates a risk of material misstatement Explanation: Planning analytical procedures are used to identify unusual transactions, events, amounts, ratios, or trends. A signi�cant unexplained decline in gross margin should be investigated and considered in the risk assessment.Page 3